I commented the other day on Excelsior Aggregates, LLC. See my blogpost “Unequivocal,” 11/4/21.

Excelsior is one of twelve (count ’em, twelve) conservation easement partnerships under the Big Escambia Ventures TMP umbrella. Excelsior is stipulated as the test case for the Escambia 12, the remaining eleven being all-in with Excelsior.

Excelsior went off on IRS’ decision to chop the appraiser per Section 6695 not being the first communication of chops to Excelsior. I called IRS (and incidentally Judge Albert G (“Scholar Al”) Lauber) on that, because the RA’s “agenda” sent to the Escambians’ counsel said “maybe chops, call me.” That’s Class A weasel-wording. The “agenda” was the first communication. An RA casually mentioning chops is exactly the kind of threatening Congress designed Section 6751 to prevent.

Today Judge Scholar Al nails Knat Creek, LLC, Big Escambia Ventures, LLC, Tax Matters Partner, Docket No. 7637-19, filed 11/15/21*. The Knats also played the Section 6695 appraiser chop gambit, and they lose partial summary J. Now I haven’t read the papers, so I can’t tell how hard, if at all, Excelsior or Knat hit the “agenda” issue. Maybe so the distinction between taxpayer and appraiser wins the day, because the “agenda” argument wasn’t properly raised.

But I would argue Section 6751(b) is a remedial statute, and should therefore be broadly applied. IIRC, even the august ABA Tax Section protested at the threat of chops being used to coerce taxpayers with meritorious claims to fold, causing Congress to enact the 1998 amendment.

I find this Excelsior pattern disturbing. Today Tax Court strains out the Knat but swallows the camel, as a much more exalted Authority put it.

*Knat Creek LLC 7637-19 11 15 21

Edited to add, 11/16/21: I reached out to one of the attorneys for Knat Creek, but he declined to comment. Though as an attorney I approve of not trying cases in the media, as a blogger I find this commendable reticence frustrating.