In Uncategorized on 06/11/2021 at 17:42

The famous remark of the Boston Theosophist to William James echoes today in Montgomery-Alabama River, LLC, Parkway South, LLC, Tax Matters Partner, Docket No. 9254-19, filed 6/11/21. I’d adverted to that case in my most recent blogpost.

The turkeys in this case are the National Wild Turkey Federation Research Foundation, a 501(c)(3) specializing in the wild turkeys that fly, as opposed to the variety that swim on the rocks with the Cinzano Rosso and a couple Luxardos (hi, Judge Holmes). Howbeit, the story has a twist on the usual conservation easements, because a week after the Monty-Als grant the conservation easement to the Turkeys-at-issue, they convey the fee (with the usual cutouts for improvements) to a wholly-Turkey-owned LLC pass-through.

Both sides want partial summary J.

The Monty-Als claim perpetuity is off the table, because if extinguishment is on the table, the Turkeys get it all anyway.

IRS claims the intervening week puts perpetuity back on the table, because “perpetuity” means “forever from the getgo.”

Judge Albert G (“Scholar Al”) Lauber, apparently Tax Court’s conservation honcho, isn’t ready to give anybody summary J.

“Respondent urges that the fee simple donation is irrelevant because it was not made simultaneously with the donation of the easement, but a week later. He asserts that the value of the donor’s and donee’s interests must be analyzed ‘at the time of the gift.’ Sec. 1.170A-14(g)(6)(ii), Income Tax Regs…. Petitioner counters that both donations were made pursuant to a ‘unified plan’ and should be considered to have been made simultaneously. Respondent alternatively contends that the fee simple donation caused violation of the Code’s perpetuity requirement ‘by terminating the easement through the state law merger of estates,’ reserving the right to present evidence at trial on this point.

“We conclude that genuine disputes of material fact dictate that we deny both motions for partial summary judgment. The question whether Montgomery made both donations as part of a ‘unified plan’ presents factual questions that are ill-suited to summary disposition. And we do not believe that respondent should be foreclosed from showing at trial that the subsequent fee simple donation terminated the easement through a ‘merger of estates.’” Order, at p. 6. (Citation omitted, but it’s our old pal PBBM-Rose Hill; see my blogpost “Stirring Times  – Enter the Supremes?” 5/15/20).

Anyway, if the easement disappears, whether because non-perpetual or merged, there are two (count ’em, two) grants forming one conveyance of certain property, for which the Monty-Als paid $3.4 million, but claimed an aggregate tax break of $16.9 million ($12.675 million for the easement and $4.225 for the fee).

IRS claims the whole turkey-shoot is worth $543K.

Ah, Judge Holmes, looks as if Judge Scholar Al, like you, prefers a valuation trial to highly contestable readings of documents concerning events so remote as to be negligible.


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