Maybe Tax Court is tired of refereeing the unending perpetuity pingpong matches. Judge Albert G (“Scholar Al”) Lauber seems to be getting a lot of them, so today he sends IRS and Pickens Decorative Stone, LLC, Eco Terra 2016 Fund, LLC, Tax Matters Partner, T. C. Memo. 2022-22, filed 3/17/22, off to find out what the 501(c)(3) guardian does with its rights to protest, protect, and defend, when confronted with infringements on the Conservation Purposes set forth in the deed. The deed covers 46 acres of GA scrub which the Decorated Stoners claim is worth the $24.7 million deduction they sold to the usual highrollers with big gains to bury.

The deed has the old “object in 30 days or you’re out” if the Decorated Stoners want to vary from the stated Conservation Purposes. IRS wants summary J that this provision thwarts perpetuity, but the Decorated Stoners say the 501(c)(3) could always sue to enjoin. We’ve seen the “deemed consent” clauses get rough treatment (cf. my blogpost “The Forty-Five,” 3/14/18), but maybe so it might could be this time for once the Decorated Stoners have dodged the cliché.

“On the basis of the record that currently exists, petitioner seems to have the stronger argument regarding the proper construction of the deed. However, in a case such as this, we do not think the ‘deemed consent’ issue can be decided as a matter of law. [501(c)(3)] may be deemed to have consented to the exercise of certain rights, but only if it has failed to respond to notices from Pickens over a period of time. [501(c)(3)]’s internal procedures and past practice may shed light on whether this is likely to happen. In any event, the question whether the exercise of a right to which consent is deemed given would impair any conservation purpose presents factual questions ill-suited to summary adjudication. For these reasons we conclude that the better course of action is to deny respondent’s Motion on this point.” T. C. Memo. 2022-22, at p. 5.

Judge, if perpetuity must be established at inception, how is “likely to occur” a factor? I’ve argued for years that condemnation, the greatest probable cause for extinguishment, is “so remote as to be negligible,” but nobody has listened. Are you now wild-carding it in?

But the Decorated Stoners want to fight the chops, and here they lose. Their argument, though, gets a Taishoff “Good Try, Third Class.” Here the dates matter.

Notice 2017-10, 2017-4 I.R.B. 544, 546, back in January, 2017, painted a bull’s-eye on syndicated conservation easements. Wherefore, say the Decorated Stoners, Boss Hossery was necessary for every syndication easement from that moment, as the Notice was “formal notification of an unequivocal intent” to chop all syndicated conservation easements.

Judge Scholar Al replies, I dare say wearily.

“An IRS announcement directed to the public at large cannot constitute ‘the first formal communication to the taxpayer of penalties.’ Moreover, because the IRS did not select Pickens’s return for examination until July 2019, it could not possibly have ‘determined’ any penalties against Pickens in 2017. The ‘initial determination’ of a penalty occurs when the IRS makes ‘an unequivocal decision to assert penalties.’ The IRS could not have made an unequivocal decision to assert penalties against Pickens before reviewing its return to determine if there existed an ‘understatement.’” T. C. Memo. 2022-22, at p. 7 (Citations omitted).