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TAX TRENDS

In addition, the Tax Court consid-
ered whether, as Hallmark argued, that The court found that the placement of the
deficiency jurisdiction was actually con- deadline in the jurisdictional statute is an
ferred on the Tax Court by Sec. 6214(a)
rather than Sec. 6213(a). As the court indication that the deadline is jurisdictional.
explained, if it were, the grant of juris-
diction would be in a different statute
than the 90-day filing deadline, lending court’s holding that the deadline to On Dec. 23, 2016, the IRS issued
credence to the argument that the dead- request a CDP hearing was jurisdic- Notice 2017-10, which identified all
line is not jurisdictional. tional, and, on appeal to the Supreme syndicated conservation easement
Hallmark argued that Sec. 6214(a), Court, the Court held unanimously transactions beginning Jan. 1, 2010, and
which it claimed dates back to Section that the deadline was not jurisdictional. all substantially similar transactions, as
274(a) of the Revenue Act of 1926, 44 However, even if Hallmark is able to “listed transactions” as defined in Regs.
Stat. 9, rather than Sec. 6213(a), is the get the Tax Court’s holding reversed on Sec. 1.6011-4(b)(2).
jurisdictional grant to the Tax Court appeal, it will still have to convince the The IRS conducted examinations
over deficiency cases because it explicitly courts that its excuse for not filing its of the partnership returns on which the
mentions jurisdiction, whereas Sec. Tax Court petition timely entitles the LLCs took their charitable easement
6213(a) does not. The Tax Court found company to equitable tolling of the fil- contribution deductions. As a result of
Hallmark’s interpretation to be both ing deadline. these examinations, the IRS issued a
historically and contextually inaccurate. Hallmark Research Collective, 159 Final Partnership Administrative Ad-
Hallmark was correct in observing that T.C. No. 6 (2022) justment (FPAA) to each LLC disallow-
Sec. 6214(a) traced back to Section 274 ing its deduction. In addition, the IRS
of the Revenue Act of 1926, but unlike asserted a Sec. 6662(h) gross-valuation-
Sec. 6213(a), it traced back to Section Procedure & Administration misstatement penalty, a Sec. 6662(e)
274(e) rather than Section 274(a). The substantial-valuation-misstatement
Tax Court had also previously held that Notice listing syndicated penalty, a Sec. 6662(b)(1) and (c) negli-
Sec. 6214(a) does not confer deficiency conservation easement gence penalty, and a Sec. 6662(b)(2) and
jurisdiction independently but instead transactions held invalid (d) substantial-understatement penalty
supplements the jurisdiction conferred Notice 2017-10, which identifies syn- against each LLC.
by Sec. 6213(a). dicated conservation easement transac- The LLCs challenged the IRS’s
Conclusion: Based on its analysis, tions as listed transactions, was held determinations in Tax Court in a
the Tax Court held that Sec. 6213(a) invalid by the Tax Court because the consolidated case. In its answer to the
clearly states, as indicated by its text, IRS issued the notice without following LLCs’ Tax Court petition, the IRS
context, and uniform treatment dur- Administrative Procedure Act (APA) also asserted the reportable transac-
ing its long history, that the 90-day notice-and-comment rulemaking. tion penalty under Sec. 6662A against
deadline for filing a Tax Court petition the LLCs.
in deficiency cases is jurisdictional. Con- Background The LLCs and the IRS made cross
sequently, Congress has limited the Tax Green Valley Investors LLC, Big Hill motions for summary judgment. In
Court’s deficiency jurisdiction to cases Partners LLC, and Tick Creek Hold- their motion, the LLCs argued that the
in which a petition has been filed within ings LLC each granted a conservation IRS could not assert the Sec. 6662A
the Sec. 6213 deadline, and the court easement to Triangle Land Conser- penalties against them because, when it
must dismiss late-filed deficiency peti- vancy (TLC) in 2014, and Vista Hill issued Notice 2017-10, the IRS failed
tions for lack of jurisdiction. Investments LLC granted one to TLC to comply with the APA’s notice-and-
in 2015. The first three limited liability comment provisions.
Reflections companies (LLCs) each claimed a
This case was reviewed by all the Tax generous deduction (over $22 million) The Tax Court’s decision
Court judges and all agreed with the for their charitable easement contribu- The Tax Court held that Notice
opinion. However, Hallmark might tion on their 2014 returns. Vista Hill 2017-10 was invalid because it was is-
take heart in the fact that in Boechler all claimed an equally generous deduction sued without notice and comment as
the Tax Court judges agreed with the for its contribution in 2015. required under the APA. Therefore,

56 February 2023 The Tax Adviser