Boondockery meets bludgeoning in Morgan Run Partners, LLC, Overflow Marketing, LLC, Tax Matters Partner, T. C. Memo. 2022-61, filed 6/14/22, so whom else but Judge Albert G. (“Scholar Al”) Lauber can tease out from the unconventional easement deed the ambiguous verbiage to defeat IRS’ Reg. Section 1.170A(14)(g)(6) perpetuity gambit? And, mirabile dictù, neither Hewitt nor Oakbrook gets a look-in.

“Respondent contends that the deed at issue violates the ‘judicial extinguishment’ regulation. But this deed, unlike most easement deeds the Court has examined, does not explicitly address the subject of judicial extinguishment. Rather, it expresses the parties’ intention that ‘no change in conditions . . . will at any time or in any event result in the extinguishment’ of the easement. Should circumstances arise that would justify modifying certain restrictions, the deed envisions that Morgan and the Trust would agree to appropriate amendments, with the proviso that the Trust would have no power to agree to any amendment that would violate section 170(h). Given this text, petitioner has a reasonable argument that the deed violates neither the ‘judicial extinguishment’ regulation nor the statutory requirement that the conservation purpose be ‘protected in perpetuity.’ See § 170(h)(5)(A).” T. C. Memo. 2022-61, at p. 6.

And as for eminent domain, the 501(c)(3) gets its “Proportionate Share” of proceeds; no mention of improvements in or out or how “Proportionate Share” is to be computed. Maybe AL law is in play on this point. No summary J for IRS.

But there is a penalty approval form in evidence prior to any written intimation of chops to the Morgan Runners, and that’s enough for Judge Scholar Al.

“Petitioner does not allege that the IRS formally communicated to Morgan [before the penalty approval form sign-off] its decision to assert penalties. Petitioner nonetheless argues that there is a dispute of fact as to whether the IRS issued some sort of penalty communication before that date. Petitioner asserts that the answer to this question is currently ‘unknowable’ and must be determined by trial.

“We disagree. Respondent has supplied documentary evidence confirming that RA A’s immediate supervisor approved the assertion of penalties… well before the IRS formally communicated its penalty determinations to petitioner. As we have repeatedly held, the statute’s timeliness inquiry ‘turns on the timing of the first ‘formal written communication’ to the taxpayer against whom the penalties are being asserted.’ We have regularly decided this question on summary judgment, on the basis of IRS records and declarations from relevant IRS officers.” T. C. Memo. 2022-61, at pp. 7-8. (Citations and name omitted).

Leaving aside the “assessed” blunder in statutory language, the evil Congress intended to avert, namely, using penalties as bludgeons to extort unjust concessions from cowering taxpayers, takes place long before anything is put in writing. Can you imagine Vito Corleone sending a postcard stating “If I am not paid by tomorrow noon, you will be the headless horseman. Love and kisses, Don V C”?