Last month I reported that there was a motion for reconsideration filed in the Paul-Adams Quarry case. Chuck Hodges of Jones Day provided me with a copy of the motion which I published here. I asked Grok for the odds of the outcome. Grok put the chance of an outcome favorable to the taxpayer at 20% to 30%. Judge Toro did much as Grok had predicted. Here is the ruling. If you want to see what Grok has to say on Judge Toro’s ruling, here it is.
I have to be honest about my limitations. I read Tax Court opinions because they have interesting stories behind them or they provide useful lessons or touch on larger issues. I’m not so great on the fine points of litigation. The argument here was in part about what was or was not implied by a stipulation from another case.
The bottom line of Judge Toro’s ruling is that he is losing patience with some of the arguments. Here is the closing with emphasis added.
“Taxpayers and their counsel have been warned in easement cases before at least two other divisions of this Court that pursuing arguments that have been repeatedly rejected may result in the imposition of sanctions pursuant to section 6673. See Transcript of Bench Opinion, Veribest Vesta, LLC v. Commissioner, No. 9158-23 (July 11, 2025); Order, Cottonpatch Timber Company, LLC v. Commissioner, No. 26103-22 (Oct. 29, 2025). We have not yet issued a warning to petitioner or his counsel in this case. But certain of the arguments in petitioner’s Motion and in his Reply bring us mighty close to doing so. We observe that pursuing meritless arguments may result in our imposing sanctions against petitioner pursuant to section 6673(a)(1) or against petitioner’s counsel pursuant to section 6673(a)(2).
Ultimately, despite the many pages petitioner has added to the record, no credible evidence in this case suggests that anyone in 2017 would have purchased this abandoned quarry for a price remotely near what petitioner claims. Petitioner’s attempts to toss aside the record developed at trial in favor of facts purportedly found—or not found—in another case, about a different and lower-valued property,
wildly miss the mark. In short, the Motion does not identify “any unusual circumstances or substantial error” with respect to the Court’s November 3, 2025, Opinion. Estate of Quick, 110 T.C. at 442. We therefore decline to reconsider the Opinion or provide any other relief requested in the Motion.”
I suspect that we will be seeing similar decisions coming out of the Tax Court until some of the appellate courts start weighing in on lasts year’s decisions.
You can check out my Conservation Easement Tax Deduction Coverage Round for fifteen years of the good, the bad and the ugly in this field.
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