Opinion
5071-21
06-05-2023
SEABROOK PROPERTY, LLC, SEABROOK MANAGER, LLC, TAX MATTERS PARTNER, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
Emin Toro, Judge
On April 27, 2023, petitioner filed a Motion for Partial Summary Judgment along with a Memorandum of Law in Support of Petitioner's Motion for Partial Summary Judgment and a Declaration of Lynn Fedor (Docs. 37, 38, 39). In the Motion, petitioner moves the Court to determine there is no genuine dispute of material fact that petitioner attached to its 2017 tax return a "qualified appraisal prepared by a qualified appraiser in satisfaction of Internal Revenue Code § 170(f)(11)(E) and Treasury Regulation § 1.170A-13(c)." Pet'r's Mot. Summ. J. 1. Petitioner moves in the alternative that any failure to comply with the requirements set forth in section 170(f)(11)(E) and Treasury Regulation § 1.170A-13(c) be excused due to reasonable cause. Id.
Unless otherwise indicated, all statutory references are to the Internal Revenue Code, Title 26 U.S.C., in effect at all relevant times, all regulation references are to the Code of Federal Regulations, Title 26 (Treas. Reg.), in effect at all relevant times, and all Rule references are to the Tax Court Rules of Practice and Procedure.
Respondent filed a Response to Petitioner's Motion for Partial Summary Judgment on May 26, 2023, along with a Declaration of Richard C. Mills in Support of Response to Petitioner's Motion for Partial Summary Judgment (Docs. 72 & 73).
Standard for Summary Judgment
The purpose of summary judgment is to expedite litigation and avoid costly, time-consuming, and unnecessary trials. Fla. Peach Corp. v. Commissioner, 90 T.C. 678, 681 (1988). Under Rule 121(b) the Court may grant summary judgment when there is no genuine dispute as to any material fact and a decision may be rendered as a matter of law. Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520 (1992), aff'd, 17 F.3d 965 (7th Cir. 1994). In deciding whether to grant summary judgment, we construe factual materials and inferences drawn from them in the light most favorable to the nonmoving party. Id. The nonmoving party may not rest upon mere allegations or denials of his pleadings but instead must set forth specific facts showing that there is a genuine dispute for trial. Rule 121(d); see Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986).
Qualified Appraisal and Qualified Appraiser
Taxpayers are required to attach to their returns a copy of a qualified appraisal for any charitable contribution deduction of more than $500,000. I.R.C. § 170(f)(11)(D). An appraisal is a qualified appraisal if it is treated as such under the regulations or other guidance prescribed by the Secretary. I.R.C. § 170(f)(11)(E). Among the requirements, a qualified appraisal must be "conducted by a qualified appraiser in accordance with generally accepted appraisal standards and any regulations or other guidance" prescribed by the Secretary. I.R.C. § 170(f)(11)(E)(i)(II).
Respondent has set forth specific facts that establish that there is a genuine dispute of material fact as to whether the appraisal is a qualified appraisal conducted by a qualified appraiser under section 170(f)(11)(E) and Treasury Regulations §§ 1.170A-13(c)(3) and -13(c)(5). Accordingly, we will deny petitioner's Motion as it relates to those points.
Reasonable Cause
A taxpayer may be excused from attaching a qualified appraisal to its return "if it is shown that the failure to meet such requirements is due to reasonable cause and not to willful neglect." I.R.C. § 170(f)(11)(A)(ii)(II). As respondent points out in the Response, questions of reasonable cause often involve triable issues of material fact. See, e.g., Abrahamsen v. Commissioner, 142 T.C. 405, 408 (2014).
Petitioner argues that reasonable cause applies to excuse it from the qualified appraisal requirement because its owners and managers exercised ordinary business care and prudence in obtaining the appraisal and relied on tax and appraisal professionals to prepare its 2017 tax return and the attached appraisal. However, based on a review of the parties' Motion papers and the record in this case, there is a genuine dispute of material fact that reasonable cause exists. Accordingly, we will deny petitioner's Motion as it relates to the application of section 170(f)(11)(A)(ii)(II).
Upon due consideration, it is
ORDERED that petitioner's Motion for Partial Summary Judgment (Doc. 37) is denied.