That’s the question about Orbital Tracking Corp., whose stock was traded on an interdealer over-the-counter market. And it matters to Michael Brauser & Betsy Brauser, Docket No. 20434-23, filed 1010/25, because they want the carryover Section 170 deduction for the 1.576 million shares of OTC they donated to a 501(c)(3).

OTC was of the type we used to call “letter stock,” now subject to SEC Rule 144, which restricts trading in certain shares, which were issued without full SEC registration to sophisticated investors and venture-vultures. But notwithstanding anything to the contrary or at variance with the foregoing, as my expensive colleagues would say, you can still donate such shares to a 501(c)(3) and get the Section 170 write-off, and value same without a Form 8283 appraisal,  if the shares are publicly-traded, per Section 170(f)(11)(A)(ii)(I).

But to reach the publicly-traded safe harbor, one must navigate the exceptions to the exceptions that festoon the Regs. If the shares are traded on a national or regional OTC for which published quotations are available, they’re not publicly-traded if there are substantial restrictions on trading that affect marketability or value. Moreover, they’re not publicly-traded if the amount claimed as a deduction is different from the amount listed in the market quotations that are readily available on an established securities market. And, in any case, the fair market value of a publicly traded security is not necessarily equal to its market quotation, its average trading price, or its face value, if any.

Mike & Betsy want summary J that OTC is publicly-traded and that, if it isn’t, they have reasonable cause (following advice of trusty, long-term CPA) why want of appraisal doesn’t torpedo their deduction.

Anyway, Mike & Betsy say that using a price ($1 per share) lower than the quoted price ($1.25 to $1.30 per share) to calculate their deduction did not violate Reg. Section  1.170A-13(c)(7)(xi)(C), either because they substantially complied with the rule or, with a tip of the Borsalino to Loper Bright,  because the rule is invalid.

Judge Emin (“Eminent”) Toro has no difficulty finding questions of fact.

“Among other things and to varying degrees, there are disputes of material fact regarding the extent to which the Orbital Tracking shares were regularly traded on an over-the-counter market, the extent to which quotations on the over-the-counter market were attributable to interdealer quotation systems, whether any of the steps that would have been required to remove the SEC Rule 144 legend from the shares either affected their value or prevented them from being freely traded, and whether reasonable cause existed for the failure to attach an appraisal to Mr. and Mrs. Brauser’s tax returns.” Order, at p. 6.

Now I do love summary J, as I’ve often stated here. But there comes a point where it’s an obvious waste of time, money, and client and judicial resources.