Playing a variation on the syndicated conservation easement gambit, Rock Spring, LLC, Rock Spring Investors, LLC, Tax Matters Partner, Docket No. 13010-20, filed 8/10/22, gave away the whole enchilada in fee simple assoluto to a 501(c)(3). So, unlike the Harbor Lofters, more particularly bounded and described in my blogpost “Hold The Gorgeous East in Fee,” 8/27/18, who didn’t, the Rockers gave it their all. No Swiss cheese, no improvements in or out, no “highly contestable readings what it means to be perpetual.”

Except.

The Rockers got the property from Isbell, who sold them a quarter of the whole of what Isbell bought for $880K in 2013. And the Rockers claimed a $23 million-with-an-M write-off, because their trusty appraiser (now an ex-appraiser per a consent order, but still in good standing when did this appraisal, so Judge Albert G (“Scholar Al”) Lauber doesn’t toss the appraisal out of hand) said there might be a mine on the land.

No, not dilithium crystals, although I was hoping for a moment. Limestone.

But even if the limestone was there for the taking, the late great Woody Guthrie’s choice for dictator got there first: the Tennessee Valley Authority, maker of electricity, reserved the right to flood the place in emergencies, and to control malaria.

IRS tries summary J, tossing the appraisal as unqualified. They claim trusty appraiser was unqualified, not because of the consent order (because that happened after this appraisal) but because trusty appraiser had prior guilty knowledge. See Reg. Section 1.170A-13(c)(5)(ii). But that’s a question of fact: who knew what when, and what did they do if they knew?

Next IRS tries “described in sufficient detail” so a stranger will know that what was appraised is what was contributed. IRS claims trusty appraiser bypassed the impact of the TVA’s flood-the-zone rights, wherefore the appraisal is not a qualified appraisal.

Well, first is substantial compliance. The appraisal does describe this particular Alabammy Boondock. And whatever TVA might or could do goes to the bottomline number, not what the property is.

“It appears to us that respondent seeks to convert a dispute about valuation and valuation methodology into a failure to satisfy the regulatory reporting requirements. [Trusty appraiser] described the donated property as a fee simple interest in specified acreage; this description would seem to enable ‘a person who is not generally familiar with the type of property to ascertain that the property that was appraised is the property that was (or will be) contributed.’ Treas. Reg. § 1.170A-13(c)(ii)(A). The documentation included with the appraisal acknowledged the existence of TVA’s reserved rights, but Clark neglected to discuss the potential adverse impact those rights might have on the Property’s alleged ‘highest and best use’ and value. Although that gap may affect the soundness of his conclusions, we do not think it amounts to a misdescription of the Property within the meaning of § 1.170A-13(c)(ii)(A).” Order, at pp. 4-5. (Footnote omitted, but it says the Rockers claim there’s another operating limestone mine nearby, and TVA’s right to flood needs a once-in-a-century storm, so no biggie).

And Judge Scholar Al hews to the ancient line. “The value of property is a question of fact. On a motion for summary judgment, ‘any evaluation of [an appraisal’s] accuracy is irrelevant for purposes of deciding whether the appraisal is qualified.’ It may well be that [trusty appraiser]’s methodology ‘was sloppy or inaccurate, or haphazardly applied,’ but that is not dispositive in determining whether petitioner satisfied the reporting requirements of section 1.170A-13(c)(3). At bottom, respondent is challenging the reliability and accuracy of [trusty appraiser]’s methodology and specific basis of valuation. This dispute must be resolved at trial, not on a motion for summary judgment.” Order, at p. 5. (Footnote and citations omitted).

As long as the appraisal covers the right land, everything else is for trial.