This greeting from the old wildcatters echoes in North Donald LA Property, LLC, North Donald LA Investors, LLC, Tax Matters Partner, T.C. Memo. 2023-50, filed 4/18/23. Of course, you’ve sussed out by now that this is more Dixieland Boondockery, LA land bought for $2975 per acre in March and syndicated for a conservation easement charitable deduction of $471,000 per acre in December of the next year.

IRS wants Boss Hoss partial summary J, and Judge Albert G (“Scholar Al”) Lauber gives IRS that much. IRS’ paperwork is perfect. But the perpetuity attack falters. The former owners the Donald family, first reserved to mine for clay, but quitclaimed that away. Mineral reservations are a no-no “‘if at any time there may be extraction or removal of minerals by any surface mining method.’ Section 170(h)(6)  provides that “the term ‘qualified mineral interest’ means . . subsurface oil, gas, or other minerals, and . . . the right to access to such minerals.” T. C. Memo. 2023-50, at p. 7.

IRS claims the Donalds reserved the right to mine for subsurface clay, but the Donalds say no, they quitclaimed that away. Judge Scholar Al finds the quitclaim deed is ambiguous (surprise, surprise!), so no summary J on perpetuity.

“…any subsurface minerals to which the Donald family reserved rights ‘may be withdrawn or extracted . . . only by means of unitization through unit wells located on other lands or by directional drilling beneath the surface of the [tract] by means of wells located on other lands.’” T. C. Memo. 2023-50, at p. 9. “Unitization” means consolidating oil and gas on lands in different ownership, not solid minerals.

Unitization is done by agreement. But the headline first set forth at the head hereof refers to the old-time practice of acquiring land with no oil under it but abutting land that does, and drilling on the slant (deviating) to steal said oil. My Texan connections tell me that said phrase had better be accompanied by a smile, or the consequences may be dire.

So there must be a trial. See ya later, deviator!