It might could be that some bright person has figured out how to do a legitimate extinguishment bailout in a conservation easement. Of course, Oconee Landing Property, LLC, Oconee Landing Investors, LLC, Tax Matters Partner, Docket No. 11814-19, filed 8/18/20*, can’t wangle partial summary J out of Judge Albert G (“Scholar Al”) Lauber. But neither can IRS Oakbrook or Coalholder the Oconees into taking a knee.

For those coming late to this party, see my blogposts “They Always Must Be With Us,” 5/12/20, and “Diamonds Are Forever,” 10/28/19.

It’s the usual markup of some GA scrub. But it’s the improvements, or lack thereof, that give the Oconees a soft landing.

“The deed prohibits any form of residential, commercial, or industrial development as well as exploration for or extraction of oil, gas, or minerals. The deed states that there were no existing structures or man-made features on the Property when the easement was granted, and it generally prohibits construction on the Property ‘of any buildings, structures (including mobile homes), or other improvements.'” Order, at p. 2.

It gets even better for the preservationists.

“Oconee reserved the rights to engage in forestry and recreational activities on the Property, including hunting, shooting, boating, fishing, camping, hiking, biking, and horseback riding. In connection with the latter Oconee reserved the right to ‘construct, repair, relocate, and remove small “Recreational-Only Structures” * * * such as deer stands, hunting blinds, emergency shelters, [and] play structures for children.’ The deed prohibits the use of such structures for residential purposes, bars the construction of utilities to serve such structures, and provides that the area of such structures within the Property could not exceed 150 square feet.

“Paragraph 4(e) of the deed, captioned ‘Improvements,’ reserves to Oconee the right to construct a ‘nature trail,’ for use by hikers and bicyclists, in a 42-acre portion of the Property comprising hardwood forest. Any nature trail had to be made of permeable materials (gravel or mulch) and closed to motorized vehicles (except those necessary for people with disabilities, emergency response, and trail maintenance). The deed lists no other permissible improvements that Oconee could make to the Property.” Order, at p. 3.

The syndicators go wild.

As for prior claims, those get paid out of the Oconees’ cut of extinguishment proceeds. Unhappily, value of future improvements is out of the extinguishment maths, but therein lies the question of fact, namely, viz., and to wit, are any permissible future improvements worth anything? And what does GA law do with prior claims when there’s a split of proceeds? Once again, substantial brain cells are decomposed for an event “so remote as to be negligible.”

Of course, the Oconees have so limited what can be done on the Property as to take them out of the Coalholders or Oakbrook.

The Oconees trot out the old PLR200836014 (Sept. 5, 2008) meets Auer argument, but Section 6110(k)(3) puts paid to that. PLRs are for the requesting taxpayer, for the requested transaction, and for the requested year(s). No others need apply.

No summary J either way, in whole or in part.

But before you go, note that 97% of this sylvan wilderness was sold to the Oconees for $3.7 million. Eight (count ’em, eight) days later, the easement deed was recorded. Whereupon the Oconees took a $20,670,000 write-off.

Section 6662(h) 40% overvaluation chop is on the table.

*OCONEE Landing 8 18 20