Rock Spring, LLC v. Commissioner

This opinion wades into the weeds of the valuation analysis. The Tax Court found fault with aspects of the taxpayer appraiser's methodology and conclusions, the appraiser had extensive experience with conservation easements helped the taxpayer avoid any appraisal penalties.

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.

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.

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.

The court denied the land trust’s motion to dismiss because the easement required land trust to have a reasonable basis for refusing to give its consent for improvements on the property and the question of reasonableness required further development of the record.

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

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.

Following Belk v. Commissioner, the Tax Court held that the conservation easement did not qualify for a charitable deduction because there was no 'qualified property interest' as required by section 170(h)(2)(C).

The District Court ruled for the IRS on summary judgment, holding that the failure to comply with I.R.C. § 170(f)(8) was, in and of itself, fatal to the deduction claim. The court rejected substantial compliance.

The Tax Court largely upheld the conservation easement donor’s valuation claim, despite flaws with the appraisal. The court also denied the taxpayer’s motion for litigation costs, finding that the IRS’s litigation position was “substantially justified” and the taxpayer was not a “prevailing party.”