To Georgia

IRS violated a basic Taishoff tenet: IRS stipulated and capitulated. IRS and North By Northwest III, LLC, Bryan Kelley, Tax Matters Partner, Docket No. 12105-19, filed 6/8/22 stipulated “… that the partnership at issue, North by Northwest III, LLC, has a principal place of business in the state of Georgia….” Order, at p. 3. And Section 7482(b)(1) sends appeals from Tax Court to circuit wherein entity has principal place of business.

OK, say my grizzled readers; leaving aside that an LLC is not a partnership, but only an entity created by State law that is taxed as a partnership for Federal tax purposes unless it otherwise elects, so what?

So this is another conservation boondockery. But these boondocks are lying, being and situated in wild, wonderful West Virginia. And, says Judge Elizabeth Crewson Paris, “…significant state property law questions may exist.” Order, at p. 3.

By now said readers are waiving their hands high in the air. They figure this is an improvements-out-at-extinguishment Reg. Section 1.170A-14(g)(6)(ii) “highly contestable reading of what it means to be perpetual.” And GA is 11 Cir, where Hewitt reigns supreme.

WV is 4 Cir, and that’s the New Frontier when it comes to boondockery. Maybe 4 Cir will buy 6 Cir’s Oakbrook deconstruction of boondockery. It’s a better shot than the dead loser in 11 Cir.

IRS folds, filing a Notice of Supplemental Authority describing 11 Cir’s giving Reg. Section 1.170A-14(g)(6(ii) the works.

“Respondent recognizes in the above-described Notice of Supplemental Authority, however, that, under the Golsen rule, this Court will now apply the Eleventh Circuit’s holding in Hewitt that Treasury Regulation § 1.170A-14(g)(6)(ii),  alone, does not operate to disallow a charitable contribution deduction in cases in which the easement deed subtracts the value of post-donation improvements to the easement property from the proceeds allocated to the donor and donee in the event of judicial extinguishment. See Golsen v. Commissioner, 54 T.C. 742, 757 (1970), aff’d, 445 F.2d 985 (10th Cir. 1971).” Order, at p. 4.

Stipulations are the bedrock of Tax Court practice. That said, stipulate, don’t capitulate.