Opinion
7475-19
11-16-2021
Industrial S&G, LLC, Big Escambia Ventures, LLC, Tax Matters Partner, Petitioner v. Commissioner of Internal Revenue, Respondent
ORDER
Albert G. Lauber Judge.
This case involves a charitable contribution deduction claimed by Industrial S&G, LLC, (ISG), for a conservation easement. ISG is subject to the TEFRA unified audit and litigation procedures, and petitioner Big Escambia Ventures, LLC, is its tax matters partner (TMP). The TMP is the petitioner in 11 other cases that involve certain common issues of law and fact.
ISG timely filed Form 1065, U.S. Return of Partnership Income, for its 2014 tax year. On that return it claimed a charitable contribution deduction for its donation of a conservation easement. In February 2019 the Internal Revenue Service (IRS or respondent) issued ISG a notice of final partnership administrative adjustment disallowing the deduction in full and determining penalties under section 6662A and section 6662(a), (b)(1), (2), and (3), (d), (e), and (h).
All statutory references are to the Internal Revenue Code in effect at all relevant times.
In May 2019 petitioner timely petitioned this Court for readjustment of the partnership items. Petitioner alleged (among other things) that the IRS did not comply with section 6751(b)(1) with respect to these penalties. It provides that "[n]o penalty under this title shall be assessed unless the initial determination of such assessment is personally approved (in writing) by the immediate supervisor of the individual making such determination."
On July 21, 2021, respondent filed a Motion for Partial Summary Judgment contending that the IRS complied with the requirements of section 6751(b)(1). Petitioner filed a response conceding that timely supervisory approval was obtained with respect to all the penalties except for those determined under section 6662(e) and (h). Petitioner contends that the IRS, in effect, made its "initial determination" to impose those two penalties against ISG when it assessed section 6695A penalties against ISG's appraiser, and that supervisory approval of the penalties was therefore untimely. Petitioner advanced this same argument in several of the related cases. The parties have designated one of those cases (Excelsior Aggregates, LLC v. Commissioner, T.C. Dkt. No. 20608-18) as the controlling case on this issue and have accordingly filed a stipulation to be bound to the holding in that case.
On November 4, 2021, the Court issued its opinion in Excelsior Aggregates, LLC v. Commissioner, T.C. Memo. 2021-125. In that opinion the Court rejected the TMP's section 6695A argument and granted the IRS' motion for partial summary judgment. Accordingly, it is
ORDERED that respondent's Motion for Partial Summary Judgment in the instant case, filed July 21, 2021, is granted.