IRS has six (count ’em, six) attorneys trying to defend a beyond-highly-contestable-reading of what it means for an easement to be perpetual. If I were counsel for Cattail Holdings, LLC, Cattail Holdings Investments, LLC, Tax Matters Partner, T. C. Memo. 2023-17, filed 2/14/23, I know I probably wouldn’t substantially prevail with an obviously phony valuation for this conservation easement on VA boondockery (Cattail says $40 mil, IRS’ appraiser says $3 mil), but I’d love to move for Section 7430 legals.

IRS says maybe there’s mining on the property, even though Judge Albert G (“Scholar Al”) Lauber overhauls the deed fore-and-aft and blows this off in a fashion so genteel as to bring a grimace to my battered visage.

“…respondent’s notion that the deed permits surface mining with [501(c(3)]’s approval strikes us as fanciful. Section 170(h)(5)(B) is captioned, ‘No surface mining permitted.’ It makes clear that allowing surface mining would be wholly inconsistent with the easement’s conservation purpose. Paragraph 3 of the deed explicitly prohibits ‘[a]ny activity or use of the Property inconsistent with the purpose of this Easement.’ In assuming ‘a contingent right to engage in surface mining,’ respondent thus posits that [501(c)(3)] might be faithless to its charitable mission by permitting Cattail to engage in activity explicitly barred by the statute. That is not a proposition that can plausibly be advanced in a motion for summary judgment.” T. C. Memo. 2023-17, at p. 7. (Footnote omitted, but my next sentence says it all).

Anyway, if the deed is ambiguous, then VA law says parol evidence can be introduced to show intent, and that’s a fact question. IRS wants summary J, so they’re not getting it.

Speaking of highly-contestable-readings, Cattail’s trusty attorneys are trying the Notice 2017-10 gambit. That was the general shot-across-the-bows warning the floggers of phony syndicated conservation easements that the bell tolls for thee. Section 6751(b) Boss Hossery requires the immediate supervisor of the RA to sign off before chops are breathed at the taxpayer. CCA learning says that must happen while supervisor still has authority, and no specific level of supervisor review is required. General notices not addressed to anyone specifically isn’t a determination of a penalty.

IRS gets summary J on Boss Hossery.