Attorney-at-Law

OVER THE HILL AND INTO THE BROOK

In Uncategorized on 07/15/2020 at 21:18

The GA syndicated conservation easements are the blogger’s delight. Always there’s good blogfodder as IRS marches through GA, making Crazy Billy Sherman look like an amateur. Today’s designated hitter from Judge Albert G (“Scholar Al”) Lauber dunks Oakhill in Oakbrook. Here’s Oakhill Woods, LLC, Effingham Managers, LLC, Tax Matters Partner, Docket No. 26557-17, filed 7/15/20.

Judge Scholar Al recapitulates 2020 T. C. Memo. 24, but you can read it all in my blogpost “We Don’t Need No Basis Disclosure,” 2/13/20. But having made low the Oakhills, IRS wants the remaining rough places made plain. And Judge Scholar Al is the man for the job.

The Oakhills went down back in February without a test of the validity of Reg. Section 1.170A-14(g)(6), the extinguishment split-of-proceeds rule. At the time Oakhill was decided, Oakbrook hadn’t been, so ruling was deferred. Well, the time has come.

“If the regulation is interpreted, as we have interpreted it, to make Oakhill ineligible for a charitable contribution deduction, Oakhill contends that the regulation is invalid. It urges that section 1.170A-14(g)(6), Income Tax Regs., is an ‘arbitrary and capricious’ rule promulgated in violation of the Administrative Procedure Act. And it contends that the regulation is substantively invalid under the test set forth in Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837 (1984). We comprehensively addressed and rejected both of these arguments in a recent Court-reviewed Opinion. See Oakbrook Land Holdings,154 T.C.at ____ (slip op. at 15-33). We need not repeat that analysis here.

“Finally, petitioner draws our attention to Priv. Ltr. Rul. 200836014 (Sept. 5, 2008) (PLR), in which the IRS found unobjectionable an easement deed with a judicial extinguishment clause resembling that here. Petitioner contends that respondent’s interpretation of the regulation as set forth in that PLR is binding on respondent under Auer v. Robbins, 519 U.S. 452, 461 (1997). Petitioner’s argument ignores the fact that determinations embodied in a PLR ‘may not be used or cited as precedent.’ Sec. 6110(k)(3). The taxpayer in PBBM-Rose Hill brought the same PLR to the Court of Appeals’ attention, but that court paid no heed to it, finding the regulation unambiguous on its face. See PBBM-Rose Hill, Ltd.v. Commissioner, 900 F.3d 195, 207-208 (5th Cir. 2018). We have done the same. See Coal Prop. Holdings, 153 T.C. at 144. In Oakbrook Land Holdings, LLC v. Commissioner, T.C. Memo. 2020-54, we dismissed reliance on Auer deference because ‘the “traditional tools of construction” le[d] us to hold that the Commissioner’s construction of the regulation is correct even if we look at the question de novo.’ Id. at *25 (quoting Kisor v. Wilkie, 588 U.S. __, __, 139 S. Ct. 2400, 2415 (2019)).” Order, at pp. 4.

Now, guys, where do we go from here?

 

 

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