Though I haven’t been in one in ten years and more, I’m sure every casino on land and sea still has a blackjack table and a couple rows slots (hi, Judge Holmes). And somewhere, every working day, Tax Court will have a syndicated conservation easement case and a microcaptive insurance case. So it is today.

A coupled entry, Kimberly Road Fulton 25, LLC, Kimberly Road Manager, LLC, Tax Matters Partner, and South Fulton Parkway 58, LLC, South Fulton 58 Manager, LC, Tax Matters Partner, T. C. Memo. 2026-36, filed 5/4/26, have Judge Mark V. (“Vittorio. Emanele”) Holmes reaching for his “IRS’ Dubious Arguments” checklist, as IRS has to win on an actual valuation trial with expert witnesses.

Forget business purpose, Congress wanted conservation. Donative intent doesn’t matter, as the only quid pro quo was tax breaks, and the 501(c)(3) that got the easement hadn’t any tax breaks to give. Unqualified appraisal? True, this was petitioners’ appraiser’s first rodeo, but he had credentials, and talking to his clients doesn’t mean collusion. And the 8283 checked the boxes. That one expert didn’t sign either the expert’s report or the 8283 doesn’t matter, as neither side called her as a witness, so whatever she did wasn’t at issue. And what petitioners gave was scenic enough, public enough, preservationist enough, and endangered or threatened species protective enough to make the Section 170 cut. That the Baseline Documentation Report was, in IRS’ expert’s opinion, “the worst BDR he had ever seen,” it did include, as the regulation suggests, a boundary survey, a map, photos of the property, its title and development histories, vantage points in which to view the property, descriptions of the hardwood forest, and a certification of accuracy, T. C. Memo. 2026-36, at p. 23, so it slides in under the tag. IRS’ buzzer-beater attempt to claim the property was inventory, because a promoter was a professional flipper, fails because new issue requiring fresh proof and the trial had already happened when IRS raises this. And the non-disclosure of a listed transaction chop enhancement went south with Green Valley.

Of course, the telephone-number appraisal gets shredded.

For the backstory on Curtis K. Kadau and Lori A. Kadau, Deceased, Curtis K. Kadau, Personal Representative, T. C. Memo. 2026-37, filed 5/4/26, see my blogpost “Microcaptivity  Enhanced,” 7/31/25. Now Judge Christian N. (“Speedy”) Weiler must deal with the 40% substantial overstatement chop and the Section 7701(o) codification (obfuscation) of economic substance.

To begin with, economic substance is relevant and this deal had none. It was the usual cash stash roundy-round. Unlike Kimberly and Fulton, supra, as my third well-brand-Gibson journalist colleagues would say, here the understatement is for nondisclosure, not listed transaction, so Green Valley plays no part.

“We have said that adequate disclosure can be made by a taxpayer providing sufficient information on the return to enable the Commissioner to identify the potential controversy involved. However, the ‘mere declaration of a deduction does not entitle taxpayer to a reduced penalty.’ 

“Considering the circumstances before us, we determine that petitioners failed to adequately disclose relevant facts or provide sufficient information on their individual returns, and likewise on [S Corp]’s corporate returns, to enable respondent to identify the fact that premiums paid and deducted were part of a microcaptive arrangement.” T. C. Memo. 2026-37, at p. 10. (Citations omitted but get them.)