John Keats gave voice to Reg. 1.170A-14(g)(6): the thing of beauty must always be with us, or, if extinguished, the 501(c)(3) has to get its fair share of the boodle. So today we get a double helping of Oakbrook Land Holdings, LLC, William Duane Horton, Tax Matters Partner.

Oakbrook is another fixed-price share if judicially extinguished, rather than a proportion.

Let’s start with 154 T. C. 10. Judge Albert G (“Scholar Al”) Lauber, writing for the majority, fills up with Chevron, and allows that Treasury properly considered the 700 pages of commentary on the reg when first proposed. Therefore the Administrative Procedures Act notice-and-comment provision was complied with. And Judge Scholar Al devotes some commentary to the New York Landmarks Conservancy’s proposal, which suggested dropping the whole thing, so I’ll give a shout-out to its present President, my friend Ms Peg Breen. See 154 T. C. 10, at p. 22.

Judges Foley, Gale, Thornton, Paris, Morrison, Kerrigan, Buch, Nega, Pugh, Ashford, and Copeland are down with this. Judge Gustafson likes parts A, B, C, D.1, and D.2, but has nothing to say about the rest.

Judge Emin (“eminent”) Toro says the statute covers the problem, so concurs in the result (dumping the deduction). No reason to go behind the statute and examine the reg. He doesn’t like the Chevron analysis. I’ll leave that to the law review writers. Judge Urda is on board with the concurrence, and Judge Jones likes Part I thereof.

But there’s a dissent. Judge Mark V Holmes may be relegated to senior status, but he tried the case and wrote the opinion (2020 T. C. Memo. 54, of which more later), so he weighs in. And how! Treasury gave a nod-and-a-wink to the comments to the reg. Even if the reg passes procedural tests, substantively it destroys a whole forest of conservation easement deductions. And Treasury overlooked valid comments; while an agency doesn’t have to respond to everything, it must consider serious things. The incantation that all were considered isn’t sufficient. And like a good neighbor, State Farm is there. The four-part State Farm test is lacking here.

And Judge Holmes cuts to the chase: “Conservation-easement cases might have been more reasonably resolved case-by-case in contests of valuation. The syndicated conservation-easement deals with wildly inflated deductions on land bought at much lower prices would seem perfectly fine fodder for feeding into a valuation grinder. Valuation law is reasonably well known, and valuation cases are exceptionally capable of settlement.

“Congress, however, enacted these sections of the Code and presumably wanted reasonably valued conservation easements to be allowed. Yet we’ve come to a point where we are disallowing a great many conservation-easement deductions altogether, not for exaggeration of their value or lack of conservation purpose, but because of very contestable readings of what it means for an easement to be perpetual.” 154 T. C. 10, at pp. 126-127.

What the majority does is insert invalidity into the overvaluation calculation.

“I fear that our efforts to clear cut and brush hog our way out of the volume of conservation-easement cases we have to deal with has left us a field far stumpier than when we began.” 154 T. C. 10, at p. 128.

This case is Golsenized to 6 Cir. I’ll bet there’s an appeal. And I make the morning line 3 to 1 on Judge Holmes. And I’ll even forgive him “just a couple years ago.” 154 T. C.10, at p. 110.