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Professors Argue Conservation Easement Deductions Should Be Denied

NOV. 7, 2019

Pine Mountain Preserve LLLP et al. v. Commissioner

DATED NOV. 7, 2019
DOCUMENT ATTRIBUTES

Pine Mountain Preserve LLLP et al. v. Commissioner

[Editor's Note:

The addendum can be viewed in the PDF version of the document.

]

PINE MOUNTAIN PRESERVE, LLLP, 
F.K.A. CHELSEA PRESERVE, LLLP 
AND EDDLEMAN PROPERTIES, LLC, 
TAX MATTERS PARTNER,
Petitioners, Appellants, and Cross-Appellees
v.
COMMISSIONER OF INTERNAL REVENUE,
Respondent, Appellee, and Cross-Appellant.

IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT

On Appeal from United States Tax Court No. 8956-13
151 T.C. No. 14 (2018)
Judge Albert G. Lauber

AMICUS BRIEF OF K. KING BURNETT, ROGER COLINVAUX,
JOHN ECHEVERRIA, JOHN LESHY, NANCY McLAUGHLIN,
JANET MILNE, AND ANN TAYLOR SCHWING
in Support of Respondent
and in Support of Affirmance in Part and Reversal in Part

ANN TAYLOR SCHWING
CA Bar No. 91914
BEST BEST & KRIEGER, L.L.P.
500 Capitol Mall, 17th Floor
Sacramento, California 95814
Telephone: (916) 325-4000
Facsimile:(916) 325-4010
Ann.Schwing@BBKlaw.com

CERTIFICATE OF INTERESTED PERSONS

Pursuant to Eleventh Circuit Rules 26.1-1, 26.1-2, 26.1-3, and 28-1(b), the undersigned counsel of record hereby certifies that, to the best of her knowledge, information, and belief, the following persons and entities have an interest in the outcome of this appeal:

  • Christensen, Jacob, attorney, Tax Division, U.S. Department of Justice;

  • Cleverdon, Edwin B., Senior Attorney, Internal Revenue Service;

  • Crump, Horace, Associate Area Counsel, Internal Revenue Service;

  • Desmond, Michael J., Chief Counsel, Internal Revenue Service

  • Eddleman, Bill, Petitioner-Appellant;

  • Eddleman, Douglas, Petitioner-Appellant;

  • Eddleman Properties, LLC, Tax Matters Partner, Petitioner-Appellant;

  • Kelley, Matthew R., Attorney, Internal Revenue Service;

  • Land Trust Accreditation Commission;

  • Land Trust Alliance, Inc., Amicus;

  • Lauber, Albert G., Judge, United State Tax Court;

  • Levin, Michelle Abroms, Attorney for Petitioner-Appellant;

  • Levin, Robert H., Attorney for Amicus

  • Levitt, Ronald A., Attorney for Petitioner-Appellant;

  • Morrison, Richard T., Judge, United States Tax Court;

  • Pine Mountain Preserve, LLLP, Petitioner-Appellant;

  • Rhodes, Gregory P., Attorney for Petitioner-Appellant

  • Rothenberg, Gilbert S., Chief, Appellate Section, Tax Division, Department of Justice;

  • Ugolini, Francesca, Attorney, Tax Division, U.S. Department of Justice;

  • Wooldridge, David M., Attorney for Petitioner-Appellant;

  • Zuckerman, Richard E., Principal Deputy Assistant Attorney General, Tax Division, U.S. Department of Justice;

  • Federal taxpayers subsidizing conservation easement acquisitions through deductions available to donors of perpetual easements;

  • Communities enjoying the benefits of deductible perpetual conservation easements;

  • Past, present and future donors of deductible perpetual conservation easements;

  • Those owning or anticipating ownership of conservation easement-encumbered land who intend or hope to modify or abrogate all or part of the perpetual use restrictions;

  • Approximately 1,300 land trusts and similar charitable organizations accepting conservation easements in the U.S., many of which have faced or will face requests to relax or release easements' perpetual use restrictions;

  • Thousands of municipalities, districts, and other government entities holding conservation easements and facing requests to relax or release the easements' perpetual use restrictions.

Except as included in general terms above, I believe there are no identified corporations or publicly-traded companies having an interest in the outcome of this appeal within the meaning of the Eleventh Circuit Rule 26.1.

CONSENT TO FILE

The Internal Revenue Service and the Department of Justice consented to the filing of this brief acting through Jacob Christensen and Francesca Ugolini of the U.S. Department of Justice (Respondent's Counsel), and Edwin B. Cleverdon (Respondent's Trial Counsel). The remaining parties and proposed amicus supporting Petitioners elected to remain silent following concurrent receipt of this brief and did not consent: David M. Wooldridge, Ronald A. Levitt, Gregory P. Rhodes, and Michelle A. Levin of Sirote & Permutt, P.C. (Petitioners' Counsel), and Robert H. Levin (Amici Counsel for Land Trust Alliance, Inc., supporting Petitioners). A motion is concurrently filed with this brief urging that K. King Burnett, Roger Colinvaux, John Echeverria, John Leshy, Nancy Mclaughlin, Janet Milne, and Ann Taylor Schwing be permitted to appear as amicus curiae.

RULE 29(A)(4)(E) STATEMENT

Amicus curiae certifies that no party's counsel authored this brief in whole or in part, no party or party's counsel contributed money intended to fund preparing or submitting this brief, and no person other than amicus contributed money intended to fund this brief. Schwing authored this brief pro bono with ideas from law professors, the land trust community, and easement donors. Her amicus briefs supporting perpetuity started with Belk v. Commissioner, 774 F.3d 221 (4th Cir.2014).

No person or party contributed funds for preparation or submission of this brief; incidental costs initially borne by Schwing's law firm will be reimbursed when appeal is complete.

Ann Taylor Schwing
Attorney of Record for Amici Curiae


TABLE OF CONTENTS

CERTIFICATE OF INTERESTED PERSONS

CONSENT TO FILE

RULE 29(a)(4)(E) STATEMENT

TABLE OF CONTENTS

TABLE OF AUTHORITIES

I. IDENTITY AND INTEREST OF AMICI

II. STATEMENT OF ISSUES

III.SUMMARY OF ARGUMENT

IV. ARGUMENT

A. Congress Did Not Rely On Easement Holders To Ensure Protection In Perpetuity

B. No-Inconsistent-Use Requirement

C. PMP's Amendment Provision Violates No-Inconsistent-Use Requirement

1. Trade-Off Amendments

2. 2005 Easement Authorizes Trade-Offs

D. Additional Tax Court Errors on Amendments

1. Deductible Easements Are Not Mere Contracts

2. Not All Amendment Provisions Are The Same

3. Claimed Widespread Use of Noncompliant Provision Does Not Justify Upholding Its Use

4. Consistency With Conservation Purposes And Holder's Tax-Exempt Status Do Not Ensure Compliance

5. Simmons And Kaufman Are Irrelevant

6. Cases Not Addressing Issue Are Irrelevant

E. Reserved Rights Violate No-Inconsistent-Use Requirement

1. Examples Do Not Delegate Verification Process To Holders

2. Private Letter Rulings Are Neither Precedential Nor Persuasive

3. Irrelevancies

V. CONCLUSION

CERTIFICATE OF COMPLIANCE

CERTIFICATE OF SERVICE

ADDENDUM

Internal Revenue Code §170(f)(3)(A) and (B)

Internal Revenue Code §170(h)

Treasury Regulation §1.170A-14

Senate Report No. 96-1007, 96th Cong. 2d Sess. 8 (1980)

TABLE OF AUTHORITIES

Federal Cases

Belk v. Commissioner 774 F.3d 221 (4th Cir.2014)

Belk v. Commissioner T.C. Memo. 2013-154

Belk v. Commissioner 140 T.C. 1 (2013)

Butler v. Commissioner T.C. Memo. 2012-72

Carpenter v. Commissioner T.C. Memo. 2012-1

Carpenter v. Commissioner T.C. Memo. 2013-172

Carroll v. Commissioner 146 T.C. 196 (2016)

Commissioner v. Simmons 646 F.3d 6 (D.C. Cir.2011), aff'g T.C. Memo 2009-208

Corley v. United States 556 U.S. 303 (2009)

Esgar Corp. v. Commissioner 744 F.3d 648 (10th Cir.2014)

Glass v. Commissioner 471 F.3d 698 (6th Cir.2006)

Kaufman v. Shulman 687 F.3d 21 (1st Cir.2012)

Minnick v. Commissioner 796 F.3d 1156 (9th Cir.2015)

Mitchell v. Commissioner 775 F.3d 1243 (10th Cir.2015)

Mitchell v. Commissioner T.C. Memo. 2013-204

PBBM-Rose Hill Limited v. Commissioner 900 F.3d 193 (5th Cir.2018)

Pine Mountain Preserve, LLP v. Commissioner 151 T.C. No. 14 (2018)

RP Golf v. Commissioner 860 F.3d 1096 (8th Cir.2017)

Scheidelman v. Commissioner 755 F.3d 148 (2d Cir.2014)

Strasburg v. Commissioner T.C. Memo. 2000-94

Texas Clinical Labs, Inc. v. Sebelius 612 F.3d 771 (5th Cir.2010)

United States v. Citgo Petroleum Corp801 F.3d 477 (5th Cir.2015)

Wachter v. Commissioner 142 T.C. 140 (2014)

Webster v. Fall 266 U.S. 507 (1925)

State Cases

Carl J. Herzog Found. v. Univ. of Bridgeport 699 A.2d 995 (Conn. 1997)

Lefkowitz v. Lebensfeld 417 N.Y.S.2d 715, 68 App.Div.2d 488, 495 (1979), aff'd, 51 N.Y.2d 442, 415 N.E.2d 919, 434 N.Y.S.2d 929 (1980)

Federal Statutes and Legislative History

I.R.C. §170(f)(3)(A)

* I.R.C. §170(f)(3)(B)(iii)

I.R.C. §170(h)

I.R.C. §170(h)(2)(C)

* I.R.C. §170(h)(5)(A)

I.R.C. §6110(k)(3)

Minor Tax Bills: Hearings Before the Subcomm. on Select Revenue Measures of the House Comm. on Ways and Means, 96th Cong. 238, 242 (1980) (App. to Testimony of French and Pickering Creeks Conservation Trust, Brandywine Conservancy, and other Conservation Organizations in re H.R. 7318 on June 26, 1980).

* Senate Report No. 96-1007, 96th Cong. 2d Sess. 8 (1980)

Tax Reform Act of 1969, Pub. L. No. 91-172, §201

Regulations

Prop. Treas. Reg. §1.170A-13, 48 Fed. Reg. 22941 (May 23, 1983)

T.D. 8069, 1986-1 C.B. 89

Treas. Reg. §1.170A-14(c)

Treas. Reg. §1.170A-14(c)(2)

Treas. Reg. §1.170A-14(d)(4)(v)

Treas. Reg. §1.170A-14(d)(5)(i)

Treas. Reg. §1.170A-14(d)(5)(v), Examples 1-2

Treas. Reg. §1.170A-14(e)

* Treas. Reg. §1.170A-14(e)(2)

* Treas. Reg. §1.170A-14(e)(2)-(3)

* Treas. Reg. §1.170A-14(e)(3)

* Treas. Reg. §1.170A-14(f), Examples 1-3

* Treas. Reg. §1.170A-14(f), Example 4

Treas. Reg. §1.170A-14(g)

* Treas. Reg. §1.170A-14(g)(5)

Treas. Reg. §1.170A-14(g)(6)

Treas. Reg. §1.170A-14(g)(6)(ii)

Restatements and Uniform Acts

Restatement (Second) of Contracts §311, cmt. a (1981)

Restatement (Third) of Property: Servitudes §1.6 cmt. b (2000)

Restatement (Third) of Property: Servitudes §7.11 cmts a-c

Uniform Conservation Easement Act (2007)

Other Authorities

Burnett, K. King, The Uniform Conservation Easement Act: Reflections of a Member of the Drafting Committee, 2013 Utah L. Rev. 773

Colinvaux, Roger, Conservation Easements: Design Flaws, Enforcement Challenges, and Reform, 3 Utah L. Rev. 755 (2013)

Hatch, Cory, Pronghorn Success Story Threatened by Cabin, Jackson Hole News & Guide (Jan. 11, 2017)

Land Trust Accreditation Commission, Accreditation Requirements Manual (April 2013)

Lawton, Pete & Andrews, Laurie, Land Trust Defends Path of Pronghorn Decision, WyoFile (Jan. 24, 2017)

Looney, Adam, Estimating the Rising Costs of a Surprising Tax Shelter: The Syndicated Conservation Easement, Brookings Institution (Dec. 20, 2017), https://www.brookings.edu/blog/up-front/2017/12/20/estimating-the-rising-cost-of-a-surprising-tax-shelter-the-syndicated-conservation-easement/

McLaughlin, Nancy, Trying Times: Conservation Easements and Federal Tax Law, Appendix A (Oct. 2019), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=338436028

Molvar, Erik, Cline Cabin Erodes Easement Sanctity, Jackson Hole News & Guide (Feb. 8, 2017)

Thuermer Jr., Angus, Ranch Owner Builds in Path of Pronghorn, WyoFile (Jan. 3, 2017)

Thuermer Jr., Angus, Cabin Removed from Path of the Pronghorn, Wyofile (July 18, 2017)

VOF Standard Template February 7, 2018, Virginia Outdoors Foundation Document Library (https://www.virginiaoutdoorsfoundation.org/resources/library/)


I. IDENTITY AND INTEREST OF AMICI

Amici are law professors Roger Colinvaux, John Echeverria, John Leshy, Nancy McLaughlin, and Janet Milne who teach or have taught tax, nonprofit, property, land use, natural resources, and conservation easement law; K. King Burnett, who served on the Uniform Conservation Easement Act drafting committee; and Ann Taylor Schwing, eleven-year Land Trust Accreditation Commissioner. Several Amici have served or now serve on land trust boards, and several are easement donors. Given their professional and personal experience, detailed in their motion to appear, Amici believe allowing deductions for the Pine Mountain Preserve (PMP) easements would be contrary to I.R.C. §170(h), the Treasury Regulations, and the legislative history, and would open the door to abusive transactions that would produce little or no conservation benefit at significant cost to taxpayers. Amici seek to highlight arguments that powerfully support the Commissioner and bring broader legal and policy issues to the Court's attention.

II. STATEMENT OF ISSUES

Did PMP's amendment provision violate §170(h)(5)(A)?

Did the Tax Court make additional errors in its analysis of the amendment issue?

Did PMP's reserved rights violate §170(h)(5)(A)?

III. SUMMARY OF ARGUMENT

At trial, PMP claimed a $97.37 million deduction under §170(h) for donating three easements to North American Land Trust (NALT). The easements violated Regulation §1.170A-14(e)(2)-(3) (the no-inconsistent-use requirement) and, thus, §170(h)(5)(A)'s protected-in-perpetuity requirement because they contain (1) a loosely-drafted amendment provision that permits uses destructive of conservation interests, (2) reserved rights that permit such destructive uses, and (3) reserved rights that prevent IRS (or court) verification of compliance with the no-inconsistent-use requirement.

The Tax Court disallowed deductions for the 2005 and 2006 easements, and Amici endorse those holdings, providing additional reasons. The Tax Court allowed the 2007 easement deduction, and Amici disagree. Amici also submit that the Tax Court's holding and dicta on amendments contain fundamental errors of fact and law that require rectification to protect the public interest and multi-billion dollar federal taxpayer investment in deductible easements.

This brief primarily addresses the 2005 easement; the same principles apply to the 2006 and 2007 easements.

IV. ARGUMENT

A. Congress Did Not Rely On Easement Holders To Ensure Protection In Perpetuity

In 1969, Congress adopted a general prohibition on deductions for donations of partial interests in property, and it has kept this general prohibition ever since. Tax Reform Act of 1969, Pub. L. No. 91-172, §201; I.R.C. §170(f)(3)(A). Partial interest donations are disfavored because they often involve abusive arrangements where donors retain extensive control over the property and the public receives little benefit.

Congress made an exception to this general prohibition for conservation easement donations in enacting §170(h) in 1980, but it imposed strict limits on the deduction given the significant potential for abuse. I.R.C. §§170(f)(3)(B)(iii), 170(h). Professor Colinvaux explains:

That the easement deduction was born as an exception to the partial interest rule is critical to its design. Congress could simply have waived the partial interest rules and left conservation easements to be treated like any other contribution of real property. . . . A donor could arrange for a conservation easement on property and contribute the easement to any charity for any reason, and a fair market value deduction would be available. This is, after all, how it normally works — with the oversight role of the IRS generally limited to checking value.

But . . . Congress took a different approach and adopted a number of special rules intended to address potential (and anticipated) problems.1

To be eligible for a deduction, a taxpayer must contribute “a restriction (granted in perpetuity) on the use which may be made of the real property,” to a “qualified organization,” for a “conservation purpose” that must be “protected in perpetuity.” I.R.C. §170(h). The protected-in-perpetuity requirement has numerous component requirements, including restriction-on-transfer; no-inconsistent-use; general-enforceable-in-perpetuity; mortgage-subordination; mining-restrictions; baseline; donee notice, access, and enforcement; judicial-extinguishment; and division-of-proceeds. Treas. Reg. §1.170A-14(c), (e), (g); Senate Report No. 96-1007, 96th Cong. 2d Sess. 8, 13-14 (1980).2

The IRS verifies compliance with these requirements at the time of donation. If the parties were free to modify perpetual easement restrictions or site potentially-destructive uses post-donation, taxpayers would be changing the deal after the donation and be beyond the reach of the Commissioner. Restrictions could be altered and siting decisions made in a vacuum in which none of the deduction requirements or indirect policing that occurs in the IRS tax return review and audit process would apply.

PMP asserts that the public interest is protected because amendments and siting decisions require the concurrence of NALT under a “consistency with conservation purposes” standard. But Congress did not grant holders the power to modify perpetual use restrictions or site potentially-destructive uses post-donation under such a standard. Given the significant potential for abuse in this partial interest donation context, Congress demanded far more protection for what has grown to be a multi-billion dollar federal taxpayer investment.3 Deductible easements must satisfy §170(h) requirements at the time of donation, and an easement that grants the holder the power to modify perpetual use restrictions or site potentially-destructive uses post-donation under a consistency-with-conservation-purposes standard violates the no-inconsistent-use requirement.

B. No-Inconsistent-Use Requirement

The amendment and certain reserved-rights provisions in PMP's easements violate the “no-inconsistent-use” requirement. Regulation §1.170A-14(e)(2) provides that, except as provided in paragraph (e)(3),4 a deduction is barred if the contribution would accomplish an enumerated conservation purpose but permit destruction of other significant conservation interests. For example, preservation of farmland as open space will not qualify for deduction if a significant naturally-occurring ecosystem could be injured or destroyed by use of pesticides in farm operations.

Under Regulation §1.170A-14(e)(3), “[a] use that is destructive of conservation interests will be permitted only if such use is necessary for the protection of the conservation interests that are the subject of the contribution.” For example, deduction for an easement donation to preserve an archaeological site is allowed even if site excavation consistent with sound archaeological practices may impair the scenic view.

These Regulations divide conservation interests into two categories: “conservation interests that are the subject of the contribution” and “other significant conservation interests.” A use destructive of conservation interests is permitted in only one limited circumstance: “if such use is necessary for the protection of the conservation interests that are the subject of the contribution.” Accordingly, (1) a use destructive of “conservation interests that are the subject of the contribution” is never permitted (destruction being antithetical to protection), and (2) a use destructive of “other significant conservation interests” is permitted only if “necessary for the protection of the conservation interests that are the subject of the contribution” (the “no-inconsistent-use” requirement). A use is “destructive of” conservation interests if it impairs, injures, or destroys conservation interests. Treas. Reg. §1.170A-14(e)(2)-(3).

Baseline and donee notice, access, and enforcement requirements backstop the no-inconsistent-use requirement. Those requirements are designed to prevent impairment of “the conservation interests associated with the property,” which are “protected in perpetuity by the easement” and the condition of which is documented “at the time of the gift.” Treas. Reg. §1.170A-14(g)(5).

Importantly, although §170(h)(5)(A) establishes the general requirement that the “conservation purpose [be] protected in perpetuity,” the no-inconsistent-use requirement is purposefully more fine-grained—it focuses on protection of the property's specific “conservation interests.”

C. PMP's Amendment Provision Violates No-Inconsistent-Use Requirement

A conservation easement that permits uses destructive of “the conservation interests that are the subject of the contribution” violates the no-inconsistent-use requirement and is not deductible. Treas. Reg. §1.170A-14(e)(2)-(3). “Trade-off” amendments, described below, permit uses destructive of such conservation interests. Accordingly, an easement that contains an amendment provision that authorizes trade-off amendments violates the no-inconsistent-use requirement and is not deductible.

The 2005 easement's amendment provision authorizes trade-off amendments and, thus, renders that easement nondeductible.

1. Trade-Off Amendments

Trade-off amendments are those that have both negative and positive effects on an easement-encumbered-property's conservation interests but are deemed by the parties to, on balance, have a “net” neutral or enhancing effect and, thus, not be inconsistent with the easement's conservation purposes. For example, the parties may agree to amend an easement to allow additional residential development on part of the property, which would be destructive of conservation interests there, in exchange for owner's agreement to add use restrictions elsewhere on the property or add nearby land to the easement, which arguably would have offsetting positive conservation effects. If the parties deem such an amendment to have a “net” neutral or enhancing effect on conservation interests, they could consider it “not inconsistent with the easement's conservation purposes” and thus, allowable under an amendment provision that authorizes them to agree to such amendments.5

However, trade-off amendments by definition involve injury to or destruction of conservation interests on the originally-protected property (the “negative effects”). Accordingly, an easement with an amendment provision authorizing trade-offs permits uses destructive of “the conservation interests that are the subject of the contribution” and thus violates the no-inconsistent-use requirement.

Congress specifically did not grant holders the power to modify perpetual use restrictions post-donation in ways that could be destructive of conservation interests that are the subject of the contribution. Rather, a deductible easement must be drafted so that those conservation interests (as well as “other significant conservation interests,” with one limited exception) are protected in perpetuity. Treas. Reg. §1.170A-14(e)(2)-(3), -14(g)(5).

This limitation on post-donation amendments is appropriate given that (1) owners requesting trade-offs may be motivated by development profits or personal desires rather than conservation, (2) in agreeing to trade-offs, holders may be motivated by avoidance of disputes with owners and anticipated cash donations, and (3) trade-offs would occur in a vacuum in which none of the deduction requirements or indirect policing that occurs in the IRS tax return review and audit process would apply.

2. 2005 Easement Authorizes Trade-Offs

The 2005 easement's amendment provision authorizes Owner and Holder, “in their sole discretion,” to agree to amendments that “are not inconsistent with the Conservation Purposes.” 2005 Easement at 25. “Conservation Purposes” are defined broadly as “[p]reservation of the [property] as a relatively natural habitat of fish, wildlife, or plants or similar ecosystem” and “as open space which provides scenic enjoyment to the general public.” Id. at 2.

This amendment provision authorizes the parties to agree to trade-offs. It allows the parties to deem an amendment with both negative and purportedly offsetting positive effects on the encumbered-property's conservation interests to, on balance, have a “net” neutral or enhancing effect and thus not be “inconsistent with the Conservation Purposes.” A trade-off amendment could, however, permit uses destructive of conservation interests that are the subject of the contribution, such as additional residential development. The amendment provision thus causes the easement to violate the no-inconsistent-use requirement and be ineligible for deduction.6

D. Additional Tax Court Errors on Amendments

1. Deductible Easements Are Not Mere Contracts

Citing Restatement (Second) of Contracts §311, cmt. a (1981), the Tax Court majority stated:

The 2007 easement involves a conveyance, which is a form of contract. Generally speaking, the parties to a contract are free to amend it, whether or not they explicitly reserve the right to do so. . . . Viewed from this perspective, [the amendment provision] is reasonably regarded as a limiting provision, confining the permissible subset of amendments to those that would not be “inconsistent with the Conservation Purposes.”7

These statements reflect a flawed understanding of deductible easements. If deductible easements were mere contracts that parties were free to amend, then an amendment provision could itself be amended and would not be a limiting provision. In addition, requiring that an easement be drafted to comply with §170(h)'s carefully-constructed requirements at the time of donation would be pointless because the parties could freely change the terms of the easement post-donation.

When Congress enacted §170(h) in 1980, it clearly intended that (1) to be deductible, an easement must be drafted to comply with §170(h) requirements and (2) the terms of the easement would be binding on the parties under state law. At hearings on proposed §170(h), responding to concerns that donees might not properly enforce deductible easements, nineteen land trusts acknowledged that deductible easements are “charitable grants” subject to the power and duty of state courts and attorneys general to enforce such grants.8 Congress thus imposed the requirements that a deductible easement be “granted in perpetuity” and its conservation purpose be “protected in perpetuity” with the understanding that the terms included in an easement to satisfy those requirements would be legally binding on the parties.

The Uniform Law Commission understood how Congress intended §170(h) to operate when it enacted the Uniform Conservation Easement Act (UCEA) in 1981. The UCEA was specifically designed to “enable [ ] the structuring of transactions so as to achieve tax benefits which may be available under the Internal Revenue Code.”9 It “enables parties to create a conservation easement of unlimited duration subject to the power of a court to modify or terminate the easement in accordance with the principles of law and equity” and explains that “[a]llowing the parties to create such easements . . . enables them to fit within federal tax law requirements that the interest be 'in perpetuity' if certain tax benefits are to be derived.”10 Also, “independently of the Act, the Attorney General could have standing” to enforce a conservation easement.11

In Carpenter v. Commissioner, T.C. Memo. 2012-1, the Tax Court itself recognized that terms of a conservation easement may be binding on the parties, finding that the easements at issue were restricted charitable gifts, or “'contributions conditioned on the use of a gift in accordance with the donor's precise directions and limitations.'” Id. at *6.

Thus, to be deductible, an easement must be drafted to comply with §170(h) requirements and its terms must be binding on the parties. An amendment provision may be included in the deed, but it too must comply with §170(h) requirements. A §170(h)-compliant amendment provision may authorize the parties to agree to protection-enhancing amendments,12 but it may not authorize the parties to agree to amendments that remove land from the easement, permit uses destructive of conservation interests (e.g., trade-offs), or relax or eliminate provisions included in the easement to comply with other deduction requirements, such as the restriction-on-transfer, judicial-extinguishment, and division-of-proceeds requirements.

The IRS is charged with ensuring that deductible easements are drafted to comply with §170(h) requirements. Professor Colinvaux explains:

The IRS can ensure that deductible conservation easements are drafted in such a way that they prevent holders from selling or otherwise transferring the easements, Treas. Reg. §1.170A-14(c)(2), and are extinguishable only in special circumstances. Id., §1.170A-14(g)(6). Enforcement of those terms then falls to the state attorney general.13

Similarly, the IRS can ensure that an amendment provision included in the deed authorizes only protection-enhancing amendments. Enforcement of the amendment provision then falls to the state attorney general and state courts (i.e., the parties can be enjoined from agreeing to amendments that exceed the authority granted to them). Amendments exceeding the authority granted to the parties are not permitted or would require judicial approval in a proceeding in which the parties would be required to establish to the satisfaction of the court (an independent arbiter) that the amendment is necessary for the protection of the conservation interests that were the subject of the contribution or otherwise consistent with the purpose of the gift.

Also, Amici would be remiss if they did not point out that the Tax Court majority erroneously cited Restatement (Second) of Contracts §311 — which does not mention conservation easements — to support its statement that a conservation easement is a form of contract that the parties are free to amend. The Tax Court fundamentally misunderstood the American Law Institute's position on conservation easements. “Conservation servitudes” are separately defined in the Restatement addressing servitudes and afforded “special protections” given the public interest and substantial public investment. Restatement (Third) of Property: Servitudes §1.6 cmt. b (2000). Most importantly, §7.11 of that Restatement applies a special set of rules based on the doctrine of cy pres and requires court approval for modification or termination of conservation servitudes held by charitable or government entities. Id. §7.11 cmts. a-c. These special protections are completely inconsistent with the notion that conservation easements are mere contracts.

In conclusion, Amici respectfully request that this Court rectify the mistake made by the Tax Court majority in stating that the terms of deductible easements are freely amendable by the parties. To be deductible, an easement must be drafted to comply with §170(h) requirements. An amendment provision included in a deductible easement may authorize protection-enhancing amendments but cannot authorize amendments that remove land from the easement, permit uses destructive of conservation interests, or relax or eliminate provisions included in the easement to comply with other deduction requirements. If the law in a state were to treat deductible easements as mere contracts that the parties are free to amend, easement donations in that state should not be deductible.14 To find otherwise would render meaningless §170(h)'s requirements for perpetual and meaningful conservation.

2. Not All Amendment Provisions Are The Same

In holding that PMP's amendment provision did not render the 2007 easement nondeductible, the Tax Court majority stated: “It appears that many conservation deeds of easement include amendment provisions of this sort.” Pine Mountain at *19. That statement was not supported.

The majority relied on an amicus brief that dissenting Tax Court Judge Morrison explained involved a different amendment provision and was unreliable. Judge Morrison was correct. No empirical evidence exists regarding numbers of easements that contain any amendment provision, much less one like that in Pine Mountain. In addition, provisions authorizing protection-enhancing amendments, but precluding amendments that are destructive of conservation interests, are being used. For example, Virginia Outdoors Foundation's template easement provides that no amendment shall be “inconsistent with the conservation purposes” and an amendment must “enhance the Property's conservation values or add to the restricted property” and “no amendment shall . . . reduce the protection of the conservation values.”15

Just as fundamental and potentially-disqualifying differences exist in extinguishment and division-of-proceeds provisions,16 there are fundamental and potentially-disqualifying differences in amendment provisions. Each must be examined individually to see if it complies with deduction requirements.

3. Claimed Widespread Use of Noncompliant Provision Does Not Justify Upholding Its Use

Claimed widespread use of a provision that violates §170(h) requirements does not justify upholding its use. The opposite is true. Section 170(h) requirements are critical to the integrity and effectiveness of the deduction program. Holding that a provision violates such requirements promotes compliance and, thus, the integrity and effectiveness of the program. PBBM-Rose Hill v. Commissioner, 900 F.3d 193 (5th Cir.2018), so recognized, holding that a “division-of-proceeds” provision violated Regulation §1.170A-14(g)(6)(ii), despite claims that the provision was widely-used.

4. Consistency With Conservation Purposes And Holder's Tax-Exempt Status Do Not Ensure Compliance

The IRS argued that PMP's amendment provision enables the parties to remove land from easement-encumbered areas or permit residential construction within them. Pine Mountain at *19. The Tax Court majority dismissed this, stating: “it is hard to imagine how NALT could conscientiously find such amendments to be 'consistent with the conservation purposes'” and the IRS “appears to contend that the easement's restrictions should be deemed 'nonperpetual' at the outset because of the risk that the qualified organization might be unfaithful to the charitable purposes on which its exemption rests.” Id.

There are two problems with these statements. First, PMP's amendment provision authorizes trade-off amendments. Accordingly, the provision does authorize amendments that could increase residential construction or permit other destructive uses.

Second, it is fundamentally flawed to base compliance with § 170(h) requirements (other than the eligible-donee requirement) on the holder's tax-exempt status.17 The rules mandating that an easement be “granted in perpetuity” and its conservation purpose be “protected in perpetuity” are requirements of the §170(h) deduction, not of federal tax exemption.

Rules governing tax exemption have a different focus. They require that a holder's assets, or more particularly, the value of those assets, be dedicated to an exempt purpose. At the level of tax exemption, “a generic commitment by the organization to an exempt purpose is what matters and not the purpose of the property held.” Colinvaux at 763-764. Thus, if a holder agreed to amend an easement to allow some development in exchange for compensation of equivalent value that it used to advance its charitable mission, it generally would not be “unfaithful to the charitable purposes on which its exemption rests.” This is why Congress imposed the §170(h) requirements and did not rely on rules governing tax exemption. To ensure that a deductible easement will, for example, attach to a specific-defined parcel, be transferable only to another eligible donee, not permit uses destructive of conservation interests (with one limited exception), and be extinguishable only in a judicial proceeding,18 the easement must be drafted to comply with §170(h) requirements, and state attorneys general and state courts are generally empowered to enforce the easement's terms.

5. Simmons And Kaufman Are Irrelevant

The Tax Court majority erroneously cited two façade easement decisions, Commissioner v. Simmons, 646 F.3d 6 (D.C. Cir.2011) and Kaufman v. Shulman, 687 F.3d 21 (1st Cir.2012), in holding that the amendment provision did not render the 2007 easement nondeductible. Those decisions are not relevant.

Neither Simmons nor Kaufman involved language like the PMP amendment provision, and neither addressed the no-inconsistent-use requirement. Those decisions were also based largely on factors totally unrelated to deductibility in Pine Mountain, including Regulation §1.170A-14(d)(5)(i), which applies only to façade easements and permits a deduction if the easement requires any future development to “conform with appropriate local, state, or Federal standards for construction or rehabilitation.”19 No similar regulation applies to conservation easements on land.

Both the Fourth and Tenth Circuits have rejected attempts to extend Simmons and Kaufman to issues not addressed,20 as has the Tax Court in some cases.21 Simply put, Simmons and Kaufman are fact-specific and should not be relied on in addressing issues not addressed in those cases.

Finally, quoting the D.C. Circuit in Simmons, the Tax Court majority stated that “'[a]ny donee might fail to enforce a conservation easement, with or without a clause stating that it may consent or abandon its rights, and a tax-exempt organization would do so at its peril.'” Pine Mountain at *19. It is true that, if a donee failed to enforce an easement and thereby conveyed a tangible economic benefit to a private party, it would do so “at its peril” because it could be sanctioned under federal tax-exemption law. But if a donee is granted authority in an easement to agree to trade-off amendments, it would face no peril for doing so. The terms of the deed would control, and the donee would be subject to sanction only if it exceeded the discretion granted to it in the deed.

6. Cases Not Addressing Issue Are Irrelevant

In support of its amendment holding, the Tax Court majority referenced Butler v. Commissioner, T.C. Memo 2012-72, and Belk v. Commissioner, 140 T.C. 1 (2013). Pine Mountain at *19 n.8. However, those cases do not constitute precedent regarding amendment provisions. Neither addressed whether an amendment provision rendered an easement nondeductible, and “questions which merely lurk in the record, neither brought to the attention of the court nor ruled upon, are not to be considered as having been so decided as to constitute precedents.” Webster v. Fall, 266 U.S. 507, 511 (1925). Also, the Belk amendment provision was not “virtually identical” to that in Pine Mountain. The Belk amendment provision authorizes amendments that “are not inconsistent with the Conservation Values” or “the purposes of this instrument,”22 and thus is different from the Pine Mountain provision.

E. Reserved Rights Violate No-Inconsistent-Use Requirement

PMP's 2005 easement violates the no-inconsistent-use requirement because some reserved rights permit destructive uses outright; others prevent IRS (or court) verification of compliance with the requirement.

For example, the 2005 easement permits construction of 10 piers plus one common boat launch facility with boat storage building and other improvements without specifying their location. 2005 Easement at 9. Owner is thus free to construct them anywhere. Depending on their location, these improvements could be destructive of “conservation interests that are the subject of the contribution.” Accordingly, the easement permits destructive uses in violation of the no-inconsistent-use requirement. If the easement had required that these improvements be constructed in an area with little or no conservation value, the no-inconsistent-use requirement would not have been violated. Pine Mountain at *37 (clustering on man-made lakeshore would not harm habitat or scenic attributes).

In some instances, the 2005 easement permits potentially-destructive uses anywhere on the property, subject to NALT's approval. For example, the easement permits construction of a single-family dwelling and accessory structures within each of 10 one-acre “Building Areas” tentatively situated around a man-made lake but subject to relocation if, in NALT's “reasonable judgment,” it would not adversely affect conservation purposes. Id. at *4. Depending on where the Building Areas are located, these uses could be destructive of conservation interests that are the subject of the contribution. That the location of these uses is subject to NALT's approval is irrelevant. The purpose of the no-inconsistent-use requirement is to enable the Commissioner (and courts) to verify, at the time of donation, that (1) the specific uses permitted by an easement will not be destructive of “the conservation interests that are the subject of the contribution” and (2) any permitted use destructive of “other significant conservation interests” is “necessary for the protection of the conservation interests that are the subject of the contribution.” The Commissioner and courts cannot engage in this verification process if the location or relocation of potentially-destructive uses is not identified in the easement.

Applying an analysis similar to that of the Fourth Circuit in Belk, it does not matter that the easement permits these potentially-destructive uses only in locations that NALT later approves. Even assuming the approval provision tracked the no-inconsistent-use regulation (which it does not), the purpose of the regulation is to enable the Commissioner, not the donee or donor, to verify compliance at the time of donation. Similar to the substitution provision that rendered the Belk easement nondeductible, the provision in the 2005 easement authorizing NALT to decide, post-donation, where potentially-destructive uses will be located places PMP “beyond the reach of the Commissioner in this regard.”23 Because the Commissioner cannot ascertain whether certain reserved rights in the 2005 easement violate the no-inconsistent-use requirement, the easement does not qualify for a deduction.

Importantly, carrying PMP's argument to its logical extreme, if the regulations were interpreted to allow holders to verify, post-donation, that the location (or relocation) of potentially-destructive uses complies with the no-inconsistent-use requirement, there would be no reason not to allow holders to also verify, post-donation, that the type, size, and amount of proposed uses comply with this requirement. That is, developers could be eligible for multi-million dollar deductions for easement donations that allow them to engage in whatever uses in whatever locations that holders might from time to time decide comply with the no-inconsistent-use requirement. Nothing in the statute, Regulations, or legislative history suggests that Congress intended to grant holders that type of discretion. The opposite is true.

1. Examples Do Not Delegate Verification Process To Holders

The examples in the Regulations do not authorize holders to verify compliance with deduction requirements post-donation. Rather, in each case, specific restrictions and reserved rights are analyzed at the time of donation to determine compliance. Treas. Reg. §1.170A-14(f), Example 1 (easement providing for “no commercial, industrial, residential, or other development use” and restricting landowner from posting or otherwise objecting to public access qualifies for deduction); Example 2 (easement “preventing any future development” qualifies for deduction); Example 3 (easement reserving right to subdivide 900 acres into 90-acre residential parcels does not qualify for deduction).24 Even Example 4 of Regulation §1.170A-14(f) does not authorize this delegation to holders.

Example 4 involves an easement on 900 acres that permits “limited cluster development of no more than five nine-acre clusters (with four houses on each cluster) located in areas generally not visible from the national park and subject to site and building plan approval by the donee organization in order to preserve the scenic view from the park.” Example 4 additionally provides, however, that donor and donee “have already identified sites where limited cluster development would not be visible from the park or would not impair the view.” The example concludes that the donation qualifies for a deduction.

An essential factor in Example 4 is that donor and donee “have already identified [at the time of donation] sites where limited cluster development would not be visible from the park or would not impair the view.” Because such sites are identified at the time of donation, the Commissioner can verify that the permitted uses will not be destructive of conservation interests (i.e., compliance with the no-inconsistent-use requirement).

To interpret Example 4 as allowing the donee to approve different sites for the clusters post-donation would read the “have already identified” factor out of the Example. Such an interpretation would be contrary to a basic canon of construction: “Regulations, like statutes, must be 'construed so that effect is given to all [their] provisions, so that no part will be inoperative or superfluous, void or insignificant.'” United States v. Citgo Petroleum Corp., 801 F.3d 477, 485 (5th Cir.2015), quoting Corley v. United States, 556 U.S. 303, 314 (2009). Accordingly, the most sensible interpretation of Example 4 is that the donee's post-donation approval rights are limited to the siting and building plans of the four houses within each cluster and, no matter where those houses are located, the no-inconsistent-use requirement would be satisfied because the pre-identified cluster sites are either not visible from the park or would not impair the view.

Notably, Example 4 does not preclude a deduction for an easement that allows the donor and donee to identify, at the time of donation, more than five possible sites where cluster development “would not be visible from the park or would not impair the view,” and the donee to later approve the five sites ultimately used. Donors and donees employ this and similar techniques to build flexibility into easements to address changing or unforeseen conditions while still allowing the Commissioner to verify, at time of donation, that the easements satisfy deduction requirements. Other techniques include identifying larger building areas than are needed to exercise reserved rights, or designating already disturbed areas with little or no conservation value as “build zones” within which reserved rights can be exercised and remaining areas as “no-build zones.”

The foregoing techniques and a provision authorizing protection-enhancing amendments provide the flexibility needed to address the “relatively unlikely” incidents noted in the Land Trust Alliance's amicus brief (at 15-17) — without granting holders discretion to agree to trade-offs or site potentially-destructive uses in unregulated and unsupervised post-donation transactions contrary to congressional intent.

2. Private Letter Rulings Are Neither Precedential Nor Persuasive

The private letter rulings (PLRs) PMP cites in support of its position are neither precedential nor persuasive. Initial Brief of Appellant at 49. PLRs may not be used or cited as precedent, I.R.C. §6110(k)(3), and adhering to this proscription is appropriate given the highly fact-specific nature of easements. In addition, three of the PLRs cited were issued before and do not address the Regulations.25 The remaining two do not (1) reflect developing jurisprudence,26 (2) address Regulation § 1.170A-14(e)(3), or (3) provide a persuasive rationale for deviating from Regulation §1.170A-14(f)'s Example 4, which they acknowledge provides that the donor and donee had already identified [at the time of donation] sites for cluster development. The Court “owes no deference to an agency's interpretation of its own ambiguous regulation if that interpretation is 'inconsistent with the regulation' or not the 'agency's fair and considered judgment.'” PBBM-Rose Hill v. Commissioner, 900 F.3d 193, 208-09 (11th Cir.2018), citing Texas Clinical Labs, Inc. v. Sebelius, 612. F.3d 771, 777 (5th Cir.2010). Finally, given the multi-billion dollar investment in deductible easements and the significant prospect for abuse given their partial interest nature, enforcement of §170(h) requirements should not be precluded based on two fact-specific nonprecedential PLRs issued fifteen and twenty-three years ago.

3. Irrelevancies

There is no evidence supporting PMP's assertion that the Tax Court's holding on movable building areas “will be applied to invalidate a great many recent easement donations.” Initial Brief of Appellant at 20. Moreover, as discussed, claimed widespread use of a provision that violates deduction requirements is not a justification for upholding its use.

Also, no prior case has addressed whether reserved rights to locate building areas post-donation with holder's approval violates §170(h) requirements. Accordingly, no prior case should be considered to constitute precedent on this important issue.

V. CONCLUSION

Because conservation easements are partial interests in property, holders have an inherent conflict of interest. While holders are supposed to enforce easements on the public's behalf, they also are highly motivated to maintain good relations with a perpetual succession of landowners, some (perhaps many) of whom may not be conservation-motivated and would benefit from the modification or release of easement restrictions and the ability to engage in potentially-destructive uses anywhere on the encumbered properties. Given the intense pressures placed on holders to acquiesce to owner demands, Congress wisely did not grant holders the power to agree to amendments or site potentially-destructive uses post-donation under a vague “conservation purposes” standard. Instead, Congress imposed strict requirements on the deduction designed to permanently protect the conservation interests on the subject properties and charged the Commissioner with verifying compliance with those requirements at the time of donation.

As a practical matter, the deduction requirements and the limits they place on the parties provide important support to holders to say “no” to aggressive landowners — and many holders welcome the constraints.

For the foregoing reasons, Amici urge the Court to affirm the Tax Court's disallowance of deductions for the 2005 and 2006 easements, and reverse the Tax Court's allowance of the deduction for the 2007 easement. Amici also respectfully request that the Court rectify the mistakes made by the Tax Court in its discussion of amendments.

DATED: October 7, 2019

By: Ann Taylor Schwing
Attorney and Amicus Curiae

FOOTNOTES

1Colinvaux, Roger, Conservation Easements: Design Flaws, Enforcement Challenges, and Reform, 3 Utah L. Rev. 755, 758 (2013).

2Congress's concerns about abuse support applying a strict construction rule to §170(h), which numerous Circuit Courts have done. Scheidelman v. Commissioner755 F.3d 148, 154 (2d Cir.2014); Belk v. Commissioner774 F.3d 221, 225 (4th Cir.2014); Glass v. Commissioner, 471 F.3d 698, 706 (6th Cir.2006); RP Golf v. Commissioner860 F.3d 1096, 1100 (8th Cir.2017); Minnick v. Commissioner, 796 F.3d 1156, 1159 (9th Cir.2015); Esgar Corp. v. Commissioner744 F.3d 648, 653 (10th Cir.2014).

3E.g., Colinvaux at 756; Looney, Adam, Estimating the Rising Costs of a Surprising Tax Shelter: The Syndicated Conservation Easement, Brookings Institution (Dec. 20, 2017), https://www.brookings.edu/blog/up-front/2017/12/20/estimating-the-rising-cost-of-a-surprising-tax-shelter-the-syndicated-conservation-easement/.

4Actual reference is “(e)(4)” but Treasury failed to update some cross-references when the Regulations were finalized. Prop. Treas. Reg. §1.170A-13, 48 Fed. Reg. 22941 (May 23, 1983).

5For a proposed trade-off amendment, see Thuermer Jr., Angus, Ranch Owner Builds in Path of Pronghorn, WyoFile (Jan. 3, 2017); Hatch, Cory, Pronghorn Success Story Threatened by Cabin, Jackson Hole News & Guide (Jan. 11, 2017); Lawton, Pete & Andrews, Laurie, Land Trust Defends Path of Pronghorn Decision, WyoFile (Jan. 24, 2017); Molvar, Erik, Cline Cabin Erodes Easement Sanctity, Jackson Hole News & Guide (Feb. 8, 2017); Thuermer Jr., Angus, Cabin Removed from Path of the Pronghorn, Wyofile (July 18, 2017). See also Land Trust Accreditation Commission, Accreditation Requirements Manual 82 (April 2013) (discussing trade-offs to accommodate landowner preferences or address violations).

6The “savings clause” in the provision is not enforceable. Belk v. Commissioner774 F.3d 221, 228-230 (4th Cir.2014).

7Pine Mountain Preserve, LLP v. Commissioner, 151 T.C. No. 14, at *19 (2018) (emphasis in original), quoting PMP amendment provision.

8Minor Tax Bills: Hearings Before the Subcomm. on Select Revenue Measures of the House Comm. on Ways and Means, 96th Cong. 238, 242 (1980) (App. to Testimony of French and Pickering Creeks Conservation Trust, Brandywine Conservancy, and other Conservation Organizations in re H.R. 7318 on June 26, 1980). See also, e.g., Carl J. Herzog Found. v. Univ. of Bridgeport699 A.2d 995, 998 (Conn. 1997) (quoting Lefkowitz v. Lebensfeld417 N.Y.S.2d 715, 68 App.Div.2d 488, 495 (1979), aff'd51 N.Y.2d 442, 415 N.E.2d 919, 434 N.Y.S.2d 929 (1980) (“'The general rule is that . . . gifts to charitable corporations for stated purposes are [enforceable] at the instance of the [a]ttorney [g]eneral'”).

9Uniform Conservation Easement Act at 3 (2007).

10Id. at 6-7.

11Id. at 7. See also Burnett, K. King, The Uniform Conservation Easement Act: Reflections of a Member of the Drafting Committee, 2013 Utah L. Rev. 773, 780 (§2(a)'s provision that an easement may be modified or terminated “in the same manner as other easements” speaks to procedural requirements — e.g., notarization; it was not intended to affect other laws limiting a holder's ability to agree to modify or terminate an easement, including laws governing charitable grants).

12“Protection-enhancing” amendments enhance protection of the subject property's conservation interests and the easement's conservation purpose and do not involve trade-offs. Examples include adding acreage or restrictions, eliminating reserved rights, or updating language. Some protection-enhancing amendments may qualify as deductible gifts. Strasburg v. Commissioner, T.C. Memo. 2000-94.

13Colinvaux at 764 n.42.

14Wachter v. Commissioner142 T.C. 140 (2014) (conservation easements in North Dakota not deductible; maximum duration limited to 99 years).

15VOF Standard Template February 7, 2018, at 19-20, Virginia Outdoors Foundation Document Library (https://www.virginiaoutdoorsfoundation.org/resources/library/) Easement Documents, VOF Easement Template (accessed Oct. 5, 2019).

16PBBM-Rose Hill Limited v. Commissioner900 F.3d 193, 205-09 (5th Cir.2018); Carroll v. Commissioner, 146 T.C. 196, 211-221 (2016); Carpenter v. Commissioner, T.C. Memo. 2013-172.

17While an “eligible donee” of a deductible easement must “have a commitment to protect the conservation purposes” and “resources to enforce the restrictions,” in defining those requirements, the regulations simply restate the tax-exempt status standard and, thus, “this is not a new test but rather a reiteration of an existing one that bears little relation to the problem of resources and commitment.” Colinvaux at 759.

18I.R.C. §170(h)(2)(C); Treas. Reg. §1.170A-14(c)(2), (e)(2)-(3), (g)(6).

19Simmons at 11, aff'g T.C. Memo. 2009-208, at *5.

20Belk v. Commissioner, 774 F.3d 221, 227-228 (4th Cir.2014); Mitchell v. Commissioner, 775 F.3d 1243, 1253-1254 n.6 (10th Cir.2015).

21Belk v. Commissioner, T.C. Memo. 2013-154, *6; Mitchell v. Commissioner, T.C. Memo. 2013-204, *8-*9; Carpenter v. Commissioner, T.C. Memo 2013-172, *7-*8.

22Belk140 T.C. at 4 n.8.

23Belk v. Commissioner774 F.3d 221, 226 (4th Cir.2014) (“It matters not that the Easement requires that the removed property be replaced with property of 'equal or greater value,' because the purpose of the appraisal requirement is to enable the Commissioner, not the donee or donor, to verify the value of a donation. The Easement's substitution provision places the Belks beyond the reach of the Commissioner in this regard.”) (emphasis in original). Same problem arises as to Regulation §1.170A-14(d)(4)(v).

24See also Treas. Reg. §1.170A-14(d)(5)(v), Examples 1 and 2 (analyzing at donation the dates, times, and types of public access authorized in easements to assess compliance with public-access requirement).

25Regulations were published January 14, 1986. T.D. 8069, 1986-1 C.B. 89.

26McLaughlin, Nancy, Trying Times: Conservation Easements and Federal Tax Law, Appendix A (Oct. 2019), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3384360.

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