In Uncategorized on 01/07/2022 at 15:06

I am sure my ultra-sophisticated, battle-hardened readers will not be convulsed with shock when they read Judge Albert G (“Scholar Al”) Lauber’s flooring of the brake pedal in Wisawee Partners II, LLC, E. Ronald Martin, Jr., Tax Matters Partner, Petitioner, Docket No. 6105-18, filed 2/7/21.

E-Ron and IRS cross-moved for partial summary J over the latest “goofy regulation,” Reg. Section 1.170A-14(g)(6). Of course, this is a conservation easement of GA boondock; Judge Scholar Al says nothing about overvaluation, but goes into the deed and amendments thereto concerning easements in or out on extinguishment.

Scholar Al, Oakbrook clutched in his hand, with the Coalholders and TOT in reserve, was ready to smite E-Ron therewith otherwise than in friendly rebuke. I’ve blogged all this stuff in extenso.

But then 11 Cir came down with Hewitt.

“Petitioner contends that the ‘judicial extinguishment’ regulation is substantively invalid under Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837 (1984), and constitutes ‘arbitrary and capricious’ rulemaking in violation of the Administrative Procedure Act (APA). We rejected these arguments in a recent Court-reviewed Opinion. See Oakbrook Land Holdings, LLC v. Commissioner, 154 T.C. 180, 189-200 (2020). However, on December 29, 2021, the Eleventh Circuit held that ‘the Commissioner’s interpretation of § 1.170A-14(g)(6)(ii), to disallow the subtraction of the value of post-donation improvements … is arbitrary and capricious and therefore invalid under the APA’s procedural requirements.” Hewitt v. Commissioner, __ F.4th __, __ (slip op. at 36) (11th Cir. Dec. 29, 2021), rev’g and remanding T.C. Memo. 2020-89 (applying Oakbrook). In light of the Eleventh Circuit’s opinion, we will hold petitioner’s motion for partial summary judgment in abeyance pending further developments.” Order, at p.  6.

Like what, Judge? An appeal to the Supremes? Maybe IRS conceding the paperwork and going to valuation? An act of Congress amending Section 170 (best of luck)?

Judge Mark V Holmes’ dissent in Oakbrook, although glossed over by 11 Cir, carries the day, and again The Great Dissenter has gifted us with a massive silt-stir.


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