Cattail Holdings, LLC v. Commissioner

The Tax Court denied the IRS’s summary judgment on whether the taxpayer retained the right to mine subsurface clay considering a prior release and the express prohibition on mining in the easement.

Recent advice from the IRS Office of Chief Counsel reiterates the IRS’s position on perpetual conservation easements on land where the landowner retains the rights to extract minerals using surface mining methods.

In a proceeds clause case with the improvement deduction language, the Tax Court denied the deductions in full, following Oakbrook Land Holdings LLC, v. Commissioner and Coal Property Holdings, LLC v. Commissioner. The Tax Court declined to consider the IRS' argument on the floating building areas.

In an unpublished order, the Tax Court denied the IRS’ motion for summary judgment reserving the proceeds issue for trial, found the deemed approval provision as not fatal because of the limitations, and rejected that the building area was “moveable.”

In an unpublished order, the Tax Court denied summary judgment without prejudice, regarding a mineral rights reservation to use borrow pits and preserved the issue for trial.

Lumpkin One Five Six LLC v. Commissioner - June 2020.pdf In a proceeds clause case with the improvement deduction language, the Tax Court denied the deductions in full, following Oakbrook Land Holdings LLC, v. Commissioner and Coal Property Holdings, LLC v. Commissioner. The Tax Court declined to consider the IRS' argument on the floating building areas.

IRS Memo on Retained Surface-Mining Rights in Conservation Easement Deeds

The trial court granted summary judgment for the LLC and denied summary judgment to the Town and County. Following well-developed New York common law, the court ruled that the deed restriction did not include any language evidencing the requisite intent to run with the land.