In Uncategorized on 02/13/2020 at 16:12

Oh Yes, You Do

Judge Albert G (“Scholar Al”) drives his Chevron tanker through Oakhill Woods, LLC, Effingham Managers, LLC, Tax Matters Partner, 2020 T. C. Memo. 24, filed 2/13/20, yet another syndicated conservation dodge in the GA boondocks.

With all these cases, I’m on a roll just now.

The Oakies left off the basis number on the 8283, claiming Forever Forests, enabler, told them and their CPA they didn’t have to. The Oakies claim this lets them off the hook on Section 170(f)(11)(A)(ii)(II) grounds.

Judge Scholar Al: “That subparagraph excuses failure to satisfy the reporting requirements discussed above if ‘it is shown that the failure to meet such requirements is due to reasonable cause and not to willful neglect.’  This statutory ‘reasonable cause’ defense is broader than the regulatory ‘reasonable cause’ defense promulgated previously.  As noted supra p. 12-13, the latter defense is limited to situations where the taxpayer has reasonable cause ‘for being unable to provide the information required.’  Sec. 1.170A-13(c)(4)(iv)(C)(1), Income Tax Regs.” 2020 T. C. Memo. 24, at pp. 27-28.

But these are motions for summary J, and “reasonable cause” raises fact questions. “These questions include whether Forever Forests was a ‘tax professional’; whether Forever Forests was ‘a competent and independent advisor unburdened with a conflict of interest,’; whether Oakhill could reasonably rely on legal advice relayed to it indirectly; whether petitioner’s CPA was a competent tax professional who provided tax advice independent of the advice supplied by Forever Forests; and whether Oakhill actually relied in good faith on whatever advice it received.” 2020 T. C. Memo. 24, at p. 30. (Citation omitted). No summary J for IRS on failure to provide reasonable cause.

But Judge Scholar Al has no such questions about the validity of Reg. Section  1.170A-13(c)(4)(ii)(D) and (E), the reporting requirement, whether or not the Oakies had reasonable cause not to.

But DEFRA84 (the Deficit Reduction Act of 1984) told Treasury, as they say in the South, to Go Set a Watchman for dodgers trying to glide beneath the radar. And a good way is to compare what was paid for the property to what is claimed for the easement.

The Oakies claim that DEFRA84 says put it on the return, not the summary appraisal. No, says Judge Scholar Al, a return is more than the 1040, 1041, 1065, or 1120, it’s everything attached, like the 8283 and summary appraisal. IRS gets millions of returns and can’t rummage around finding buried ordnance. And even if “return” and “Summary appraisal” are somehow mutually exclusive, nothing prevents IRS from requiring inclusion on both.

“DEFRA section 155(a)(3), which petitioner fails to cite, wholly undermines its argument.  That paragraph, captioned ‘Appraisal summary,’ provides that, ‘[f]or purposes of this subsection, the appraisal summary shall be in such form and include such information as the Secretary prescribes by regulations.” (Emphasis added.)  Congress thus left the Secretary with discretion to require inclusion on Form 8283 of whatever information the Secretary reasonably deemed relevant…. The Code provision governing appraisals makes the depth of the Secretary’s discretion plain.  See sec. 170(f)(11)(C) (requiring that taxpayers obtain a qualified appraisal and ‘attach[] to the return* * * such information regarding such property and such appraisal as the Secretary may require’).  For these reasons we reject petitioner’s contention that the regulation violates Chevron step one on the theory that it contravenes ‘the unambiguous language of the statute.’” 2020 T. C. Memo. 24, at p. 25-26. (Citation omitted)

And of course the Reg. satisfies Chevron as a permissible reading of the statute, as a comparison of basis to claimed worth of easement shows up an inflated appraisal like luminol shows blood.

Reg. sustained. Dodgers, look out.


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