Lumpkin HC, LLC v. Commissioner

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 disallowed a CE deduction in full due to missing basis on Form 8283.Tax Court found for the IRS that taxpayer had not substantially complied and that the information is reasonably obtainable and necessary. The tax court follows that of RERI Holdings I, LLC v. Commissioner, 149 T.C. No. 1.

The Tax Court upheld the validity of the proceeds regulation and found the improvements clause to violate the regulation. It also determined that conditional language constituted a savings clause and was therefore unenforceable.

In an unpublished order, the Tax Court denied the IRS’ motion for summary judgment reserving the proceeds issue for trial, found the deemed approval provision as not fatal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.”

The 11th Circuit vacated part of the Tax Court decision that disallowed the charitable deduction based on the improvements clause in the termination proceeds provision but affirmed the Tax Court’s decision on the valuation penalty.

The Tax Court denied the IRS motion for summary judgment concerning a prohibition on the extraction of subsurface minerals by a surface mining method.

In 2012, Railroad Holdings LLC granted conservation easement on 452-acre parcel to the SE Regional Land Conservancy and claimed a $16 million charitable contribution deduction. The easement contained a termination proceeds provision that differed from the language of Reg. § 1.170A-14(g)(6)(ii).