Opinion
12472-20 12482-20 12483-20 13758-20
09-13-2023
ROCK CLIFF RESERVE, LLC, FIVE RIVERS CONSERVATION GROUP, LLC, TAX MATTERS PARTNER, ET AL., Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
Joseph W. Nega, Judge
These conservation easement cases are calendared for trial at the special session of the Court scheduled to commence on October 30, 2023, in Atlanta, Georgia. On August 31, 2023, petitioners filed a Motion in Limine and Incorporated Memorandum of Law to Preclude Respondent from Raising New Matters, Or, Alternatively Shift the Burden of Proof on the New Matters (Docket No. 112).
Petitioners argue that respondent should be precluded from arguing that the petitioners' respective noncash charitable contributions were inventory property subject to limitations under section 170(e). Petitioners also argue that respondent should be precluded from arguing that entities involved in the transactions were not bona fide partnerships for tax purposes. Petitioners characterize these theories as "new matters" and claim unfair surprise and prejudice by reason of respondent not identifying these precise theories until July 19, 2023.
Unless otherwise indicated, statutory references are to the Internal Revenue Code, Title 26 U.S.C., in effect at all relevant times, regulation references are to the Code of Federal Regulations, Title 26 (Treas. Reg.), in effect at all relevant times, and Rule references are to the Tax Court Rules of Practice and Procedure.
Petitioners' arguments in support of exclusion are not persuasive. Petitioners cannot claim surprise that respondent's July 19, 2023 letter raised the issue of limitations to charitable contribution deductions imposed by section 170(e) because respondent issued to each petitioner a Final Partnership Administrative Adjustment (FPAA) in 2020 identifying violation of the requirements of section 170 to support the deficiency determination. Complying with section 170(e) is one of the requirements of section 170 and is directly implicated by the language in the FPAAs that respondent issued to petitioners. Similarly, the breadth of the FPAA encompasses the validity of the transactions. All information regarding whether the entities involved in the transactions were bona fide partnerships is readily available to petitioners who will thus not be prejudiced by the presentation of such a theory at trial. Furthermore, any discussion of shifting the burden of proof is premature.
Upon due consideration, and for cause, it is
ORDERED that petitioners' Motion in Limine and Incorporated Memorandum of Law to Preclude Respondent from Raising New Matters, filed August 31, 2023, is denied as to the requirements of section 170. It is further
ORDERED that petitioners' alternative Motion to Shift the Burden of Proof on the New Matters, filed August 31, 2023, is denied without prejudice.