In Uncategorized on 08/31/2022 at 18:33

I’m sure many of my readers (that small but mighty band) have sat, knees to chin in thirty-one inch pitch straightjackets, electronics locked away, peering through plexiglass parallelograms at endless lines of aluminum tubes, cursing the HR or management committee that decreed economy class for domestic travel. “Line up and wait,” said Air Traffic Control.

Judge Albert G (“Scholar Al”) Lauber, having first disposed of Long Leaf Property Holdings, LLC, Long Leaf Manager, LLC, Tax Matters Partner, Docket No. 11982-16, filed 8/31/22, and its intervenor non-TMP members’ motion for summary J, is ready to award summary J to IRS on the usual “highly contestable readings of what it means to be perpetual.”

But of course the Long Leaves syndicated some GA boondockery. Wherefore Golsen, right? Which means 11 Cir, which means Hewitt.

Not hardly.

Judge Scholar Al exemplifies once again my mantra: A lawyer who can’t find an ambiguity should find another way to make a living.

“We are obligated to follow the law as established by the Eleventh Circuit on this issue. See Golsen v. Commissioner, 54 T.C. 742, 756–57 (1970), aff’d, 445 F.2d 985 (10th Cir. 1971). However, there is some uncertainty as to how the Eleventh Circuit would evaluate the deed involved here, which is deficient not because of a carve-out for ‘donor improvements’ but because it caps the donee’s share of post-extinguishment sale proceeds at a fixed historical value. It is not entirely clear whether the Eleventh Circuit invalidated the ‘judicial extinguishment’ regulation in its entirety, or whether the court invalidated that regulation only insofar as it is interpreted to disallow deductions based on carve-outs for donor improvements. Compare Hewitt, 21 F.4th at 1353 (‘[T]he Commissioner’s interpretation of [the regulation] to disallow the subtraction of the value of post-donation improvements . . . is arbitrary and capricious . . . .”), with id. at 1339 n.1 (‘[W]e conclude that § 1.170A-14(g)(6)(ii) is procedurally invalid under the APA . . . .’). The Eleventh Circuit may have the opportunity to define further the scope of its opinion in Hewitt, and we hesitate to address the question presented before the authoring court has had the chance to do so.” Order, at p. 7.

The Long Leaves’ split is 501(c)(3) gets inception FMV at extinguishment, regardless of actual FMV at extinguishment. “If the Property were to appreciate—real estate often does—[501(c)(3)] would ‘watch its proportion of potential extinguishment proceeds shrink over the years.’ Thus, the easement’s conservation purpose is not protected in perpetuity.” Order, at pp. 6-7. (Citation omitted).

Judge, I’ve been through at least seven (count ’em, seven, and I have) real estate booms and busts. I’ve heard of putative heirs holding oxygen bottles to laboring lips while shaky hands sign the contract to buy. I’ve also done foreclosure auctions on the courthouse steps when even the pigeons flew away. If the crazy valuations these dodgefloggers put on this junk are anywhere in the same galaxy with FMV, the 501(c)(3)s are quids-in.

Howbeit, what to do until the Supremes sort this out?

“… we will deny respondent’s Motion for Partial Summary Judgment at this time, without prejudice to his resubmission of the arguments set forth therein should subsequent developments warrant that action. This is the course we have followed in other cases presenting this scenario. See, e.g., Park Lake II, LLC v. Commissioner, T.C. Dkt. No. 12115-20 (Order served June 17, 2022); Park Lake III, LLC v. Commissioner, T.C. Dkt. No. 8018-21 (Order served June 17, 2022); Maxwellton Propco, LLC v. Commissioner, T.C. Dkt. No. 11598-20 (Order served May 9, 2022); Sand Valley Holdings, LLC v. Commissioner, T.C. Dkt. No. 12141-20 (Order served Feb. 18, 2022); Rocky Comfort Creek Holdings, LLC v. Commissioner, T.C. Dkt. No.12106-20 (Order served Feb. 17, 2022). And we will hold intervenors’ Motion for Partial Summary Judgment in abeyance pending further appellate developments on the validity of Treas. Reg. § 1.170A-14(g)(6). See Briarcreek Preserve, LLC v. Commissioner, T.C. Dkt. 1547-18 (Order served Apr. 4, 2022); Montgomery-Ala. River, LLC v. Commissioner, T.C. Dkt. 9254-19 (Order served Feb. 25, 2022); Oconee Landing Prop., LLC v. Commissioner, T.C. Dkt. No. 11814-19 (Order served Jan. 10, 2022); Wisawee Partners II, LLC v. Commissioner, T.C. Dkt. No. 6105-18 (Order served Jan. 7, 2022).” Order, at p. 8.

LGA Departure has nothing on Judge Scholar Al.


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