Tax Court In Brief | Cattail Holdings, LLC v. Comm'r | Conservation Easement "Protected In Perpetuity" And Supervisory Approval Of Penalty

• Jurisdiction: United States,Federal
• Law Firm: Freeman Law
• Subject Matter: Tax, Income Tax, Tax Authorities
• Author: Freeman Law
• Published date: 21 February 2023

The Tax Court in Brief - February 13th - February 17th, 2023

Freeman Law's 'The Tax Court in Brief' covers every substantive Tax Court opinion, providing a weekly brief of its decisions in clear, concise prose.

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Tax Litigation: The Week of February 13th, 2022, through February 17th, 2023

• Kemegue v. Comm'r, T.C. Summary Opin. 2023-5| February 13, 2023 | Carluzzo, J. | Dkt. No 8987-20S
• Thomas v. Comm'r, 160 T.C. No. 4| February 13, 2023 | Toro, J. | Dkt. No 12982-20
• Trice v. Comm'r, T.C. Memo. 2023-15| February 13, 2023 | Gustafson, J. | Dkt. No 20398-19
• Patrinicola v. Comm'r, T.C. Memo. 2023-16| February 14, 2023 | Goeke, J. | Dkt. No. 498-19

Cattail Holdings, LLC v. Comm'r, T.C. Memo. 2023-17| February 14, 2023 | Lauber, J. | Dkt. No. 27209-21

Summary: In September 2016 Dolomite Holdings 251, LLC (Dolomite), acquired a 723-acre tract of land in Virginia. On November 28, 2017, Dolomite contributed 207 acres of this tract (Property) to Cattail in exchange for a 100% interest in Cattail. Dolomite later sold interests in Cattail to investors. In December 2017 Cattail granted an open-space conservation easement over the Property to the Foothills Land Conservancy (Foothills), a 'qualified organization' for purposes of section 170(h)(3). The easement deed recites the parties' intent that the land 'be retained forever in its undeveloped, natural, scenic, farm land, forested and/or open land condition.' The deed generally prohibits commercial, industrial, or residential development. But, it reserved certain recreational rights to Cattail as grantor. Cattail also reserved the right to construct barns, sheds, and facilities 'for the generation of renewable electrical power.' Cattail was required to seek Foothills' consent for exercising any of the activities reserved to Cattail. The deed also prohibited:

The exploration for, or development and extraction of, minerals and hydrocarbons by any surface or subsurface mining method, by drilling, or by any other method, or transportation of the same via new pipelines or similar facilities, that would impair or interfere with the Conservation Purposes and Conservation Values of the Property in any material respect in the discretion of the Grantee.

Cattail timely filed Form 1065, U.S. Return of Partnership Income, for its 2017 tax year. Cattail claimed a charitable contribution deduction of...