B. Belk, Jr. v. Commissioner of Internal Revenue

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 13-2161
B. V. BELK, JR.; HARRIET C. BELK,
Petitioners - Appellants,
v.
COMMISSIONER OF INTERNAL REVENUE,
Respondent - Appellee.
-------------------------------------
THE LAND TRUST OF NAPA COUNTY; ANN TAYLOR SCHWING; ROGER
COLINVAUX; JOHN ECHEVERRIA; JOHN LESHY; NANCY MCLAUGHLIN;
JANET MILNE,
Amici Supporting Respondent.
Appeal from the United States Tax Court.
(Tax Ct. No. 005437-10)
Argued: October 29, 2014 Decided: December 16, 2014
Before MOTZ, KING, and KEENAN, Circuit Judges.
Affirmed by published opinion. Judge Motz wrote the opinion, in
which Judge King and Judge Keenan joined.
ARGUED: David Mace Wooldridge, SIROTE & PERMUTT, P.C.,
Birmingham, Alabama, for Appellants. Patrick J. Urda, UNITED
STATES DEPARTMENT OF JUSTICE, Washington, D.C., for Appellee.
ON BRIEF: Ronald A. Levitt, Gregory P. Rhodes, Michelle A.
Levin, SIROTE & PERMUTT, P.C., Birmingham, Alabama, for
Appellants. Tamara W. Ashford, Acting Assistant Attorney
General, Gilbert S. Rothenberg, Jonathan S. Cohen, Tax Division,
UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for
Appellee. Ann Taylor Schwing, BEST BEST & KRIEGER, L.L.P.,
Sacramento, California, for Amici Land Trust of Napa County and
Ann Taylor Schwing. Douglas A. Ruley, Environmental and Natural
Resources Law Clinic, VERMONT LAW SCHOOL, South Royalton,
Vermont, for Amici Roger Colinvaux, John Echeverria, John Leshy,
Nancy McLaughlin, and Janet Milne.
2
DIANA GRIBBON MOTZ, Circuit Judge:
After taxpayers donated a conservation easement to a land
trust, they claimed a $10,524,000 charitable deduction for the
asserted value of the easement. The Tax Court held that the
easement did not qualify as a charitable contribution and so the
taxpayers were not entitled to the deduction. For the reasons
that follow, we affirm.
I.
The parties stipulated to the following facts before the
Tax Court.
Between 1994 and 1996, B.V. and Harriet Belk accumulated
roughly 410 acres of land straddling Union and Mecklenburg
Counties outside of Charlotte, North Carolina. In February
1996, the Belks formed a limited liability company, Olde
Sycamore, LLC, and transferred to it their newly acquired parcel
of land. Olde Sycamore developed the land, building a golf
course and surrounding it with 402 residential lots, which were
later sold to builders. Single-family homes now occupy those
lots, and Olde Sycamore continues to own the golf course. Old
Sycamore remains wholly owned by the Belks -- ninety-nine
percent by B.V., and one percent by his wife, Harriet.
In 2004, Olde Sycamore executed a conservation easement
(“the Easement”) covering roughly 184 acres of the land on which
3
the golf course now sits. The Easement was then transferred to
Smoky Mountain National Land Trust, Inc. (“the Trust”) and
recorded in both Union and Mecklenburg Counties. The Easement
imposes on the 184-acre parcel a number of enforceable use
restrictions, including a prohibition on further development and
a requirement that the parcel be used “for outdoor recreation.”
Olde Sycamore granted the Easement in perpetuity, subject to
certain “Reserved Rights.”
One such reserved right, central to this appeal, permits
Olde Sycamore to “substitute an area of land owned by [it] which
is contiguous to the Conservation Area for an equal or lesser
area of land comprising a portion of the Conservation Area.”
Olde Sycamore’s substitution right is conditioned upon the
Trust’s agreement that “the substitute property is of the same
or better ecological stability,” that “the substitution shall
have no adverse effect on the conservation purposes,” and that
the fair market value of the substituted property is at least
equal to that of the property originally subject to the
Easement. The substitution provision thus permits Olde
Sycamore, if the Trust agrees (and it cannot unreasonably
withhold agreement), to swap land in and out of the Easement.
In doing so, Olde Sycamore can shift the use restriction from
one parcel to another, provided the Easement continues to cover
at least 184 acres and to advance its stated conservation
4
purpose. Such a substitution becomes final when reflected in a
formal amendment to the Easement recorded in the relevant county
or counties.
The Easement contains a savings clause, also of relevance
here, which circumscribes the Trust’s ability to agree to such
amendments. This clause provides that the Trust “shall have no
right or power to agree to any amendments . . . that would
result in this Conservation Easement failing to qualify . . . as
a qualified conservation contribution under Section 170(h) of
the Internal Revenue Code and applicable regulations.” Section
170(h) details the circumstances under which the grant of a
conservation easement may be claimed as a charitable
contribution deduction. See 26 U.S.C. § 170(h) (2012).
On its 2004 income tax return, Olde Sycamore claimed a
deduction of $10,524,000 for the donation of the Easement to the
Trust. The deduction passed through to the Belks as the sole
owners of Olde Sycamore, see 26 U.S.C. § 702(a)(4), and the
Belks claimed the deduction on their 2004, 2005, and 2006 income
tax returns.
In 2009, the Commissioner of Internal Revenue sent the
Belks a notice of deficiency, informing them that they owed
substantial amounts in back taxes for tax years 2004, 2005, and
2006. The Commissioner reasoned that the Belks had not
“established that all the requirements of IRC § 170 and the
5
corresponding Treasury Regulations ha[d] been satisfied to
enable [them] to deduct the noncash charitable contribution of a
qualified conservation contribution.”
The Belks filed a petition for redetermination with the Tax
Court. The Tax Court upheld the Commissioner’s determination in
a published opinion, and upon motion for reconsideration by the
Belks, issued a supplementary opinion reaching the same
conclusion. The Belks timely appealed to this court, and we
have jurisdiction pursuant to 26 U.S.C. § 7482(a)(1).
II.
The Internal Revenue Code permits taxpayers to deduct from
their taxable income the value of a qualifying charitable
contribution. 26 U.S.C. § 170(a)(1). The Code generally
restricts a taxpayer’s ability to claim a charitable deduction
for the donation of “an interest in property which consists of
less than the taxpayer’s entire interest in such property.” Id.§ 170(f)(3)(A). But it provides an exception to the general
rule for “a qualified conservation contribution.” Id.
§ 170(f)(3)(B)(iii).
The Code defines a “qualified conservation contribution” as
“a contribution (A) of a qualified real property interest, (B)
to a qualified organization, (C) exclusively for conservation
purposes.” Id. § 170(h)(1). It is the first requirement --
6
that the donation be of “a qualified real property interest” --
that the Tax Court concluded the Belks had not satisfied here,
and which is now the focus of this appeal. 1
A “qualified real property interest” includes “a
restriction (granted in perpetuity) on the use which may be made
of the real property.” Id. § 170(h)(2)(C). Because an easement
is, by definition, a “restriction . . . on the use which may be
made of . . . real property,” id., the donation of a
conservation easement can properly provide the basis of a
deduction under the Code -- if the restriction is granted in
perpetuity.
The Treasury Regulations offer a single -- and exceedingly
narrow -- exception to the requirement that a conservation
easement impose a perpetual use restriction. The regulations
provide that in the event that a
subsequent unexpected change in the conditions
surrounding the property . . . make[s] impossible or
impractical the continued use of the property for
conservation purposes, the conservation purpose can
nonetheless be treated as protected in perpetuity if
the restrictions are extinguished by judicial
proceeding and all of the donee’s proceeds . . . from
a subsequent sale or exchange of the property are used
1
The parties agree that the Trust is a “qualified
organization.” In addition to the ground relied on by the Tax
Court, the Commissioner also contended that the donation
furthers no valid “conservation purpose,” and that, in any
event, its value did not approach the $10,524,000 the Belks
claimed. The Tax Court did not reach these arguments; nor do
we.
7
by the donee organization in a manner consistent with
the conservation purposes of the original
contribution.
Treas. Reg. § 1.170A-14(g)(6)(i) (emphasis added). Thus, absent
these “unexpected” and extraordinary circumstances, real
property placed under easement must remain there in perpetuity
in order for the donor of the easement to claim a charitable
deduction.
Where, as here, the parties have proceeded on stipulated
facts before the Tax Court, we “review the Tax Court’s legal
decisions de novo.” Pfister v. Commissioner, 359 F.3d 352, 353
(4th Cir. 2004). In doing so, we keep in mind that deductions
are a matter of legislative grace and the taxpayers bear the
burden of proving their entitlement to a claimed deduction. See
INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84 (1992); New
Colonial Ice Co. v. Helvering, 292 U.S. 435, 440 (1934).
III.
The Tax Court concluded that the Belks were not entitled to
claim a deduction for the donation of the easement because Olde
Sycamore had not donated “a qualified real property interest.”
26 U.S.C. § 170(h)(1). The Tax Court reasoned that “because the
conservation easement agreement permits [the Belks] to change
what property is subject to the conservation easement, the use
restriction was not granted in perpetuity,” as required by
8
§ 170(h)(2)(C). The Belks maintain that the Code requires only
a restriction in perpetuity on some real property, rather than
the real property governed by the original easement.
Appellants’ Br. 26. The Easement here satisfies this
requirement, they argue, because any property removed from the
Easement must be replaced with property of equal value that is
then subject to the same use restrictions.
The plain language of the Code belies this contention. For
the Code expressly provides that a “qualified property interest”
includes “a restriction (granted in perpetuity) on the use which
may be made of the real property.” 26 U.S.C. § 170(h)(2)(C)
(emphasis added). The placement of the article “the” before
“real property” makes clear that a perpetual use restriction
must attach to a defined parcel of real property rather than
simply some or any (or interchangeable parcels of) real
property. For “the” is a definite article, which lends to the
noun that follows it a specific rather than general identity.
See American Bus Ass’n v. Slater, 231 F.3d 1, 4-5 (D.C. Cir.
2000); see also Webster’s Third New International Dictionary
2368 (1993) (providing the primary definition of “the” as “a
function word [used] to indicate that a following noun . . .
refers to someone or something previously mentioned or clearly
understood from the context or the situation”).
9
Reading § 170(h)(1) and (2) together further makes clear
that the defined parcel of land identified by the phrase “the
real property” is the real property to which the donated
conservation easement initially attached. These provisions of
the Code provide:
(h) Qualified conservation contribution.
(1) In general. For purposes of subsection
(f)(3)(B)(iii), the term “qualified conservation
contribution” means a contribution (A) of a
qualified real property interest, (B) to a
qualified organization, (C) exclusively for
conservation purposes.
(2) Qualified real property interest. For
purposes of this subsection, the term “qualified
real property interest” means any of the
following interests in real property: (A) the
entire interest of the donor other than a
qualified mineral interest, (B) a remainder
interest, and (C) a restriction (granted in
perpetuity) on the use which may be made of the
real property.
26 U.S.C. § 170(h)(1)-(2) (2012). Section 170(h)(2) defines the
term “qualified real property interest” as used in
§ 170(h)(1)(A), providing that “the term qualified real property
interest means . . . a restriction (granted in perpetuity) on
the use . . . of the real property.” Thus, in order to qualify
as a qualified conservation contribution, the parcel in which
use must be restricted in perpetuity is “the parcel” that must
be contributed “to a qualified organization . . . exclusively
for conservation purposes.”
10
The Easement at issue here fails to meet this requirement
because the real property contributed to the Trust is not
subject to a use restriction in perpetuity. The Easement
purports to restrict development rights in perpetuity for a
defined parcel of land, but upon satisfying the conditions in
the substitution provision, the taxpayers may remove land from
that defined parcel and substitute other land. Thus, while the
restriction may be perpetual, the restriction on “the real
property” is not. For this reason, the Easement does not
constitute a “qualified conservation contribution” under
§ 170(h) and the Belks were not entitled to claim a deduction
for the contribution.
Moreover, permitting the Belks to claim a deduction for the
Easement would enable them to bypass several requirements
critical to the statutory and regulatory schemes governing
deductions for charitable contributions. For instance, 26
U.S.C. § 170(f)(11)(D) requires that “[i]n the case of
contributions of property for which a deduction of more than
$500,000 is claimed . . . a qualified appraisal of such
property” must accompany the tax return. Permitting the Belks
to change the boundaries of the Easement renders the appraisal
meaningless; it is no longer an accurate reflection of the value
of the donation, for parts of the donation may be clawed back.
It matters not that the Easement requires that the removed
11
property be replaced with property of “equal or greater value,”
because the purpose of the appraisal requirement is to enable
the Commissioner, not the donee or donor, to verify the value of
a donation. The Easement’s substitution provision places the
Belks beyond the reach of the Commissioner in this regard.
The requirement in the Treasury Regulations that a donor of
a conservation easement make available to the donee
“documentation sufficient to establish the condition of the
property” would also be skirted if the borders of an easement
could shift. Treas. Reg. § 1.170A-14(g)(5)(i); see also id.§ 1.170A-14(g)(5)(i)(A)-(D) (listing maps and photographs of the
property as potential sources of this documentation). Not only
does this regulation confirm that a conservation easement must
govern a defined and static parcel, it also makes clear that
holding otherwise would deprive donees of the ability to ensure
protection of conservation interests by, for instance,
examination of maps and photographs of “the protected property.”
Id.
The regulations do provide that the use restrictions on a
donated easement can be extinguished without sacrificing the
donor’s tax benefit in one limited instance. That is, when “a
subsequent unexpected change in the conditions surrounding the
property that is the subject of a donation . . . make impossible
or impractical the continued use of the property for
12
conservation purposes” and “the restrictions are extinguished by
judicial proceeding.” Id. § 170A-14(g)(6). The Belks maintain
that this limited exception to the perpetuity requirement “would
be invalid” if the Tax Court’s reasoning is upheld. Reply Br.
5. That argument fails. This regulation permits a donor to
retain a tax benefit when a conservation easement, though
“granted in perpetuity,” subsequently cannot further its
conservation purpose and is extinguished by court order. The
regulation does nothing to undercut the correctness of the Tax
Court’s holding here that the Code requires a donor to grant an
easement to a single, immutable parcel at the outset to qualify
for a charitable deduction. 2
In short, the Code and Treasury Regulations together make
clear that § 170(h)(2)(C) means what it says: a charitable
deduction may be claimed for the donation of a conservation
2
The Belks raise a similar argument with respect to Treas.
Reg. § 1.170A-14(c)(2), which permits a donee to “exchange[]”
property subject to a conservation easement in the same limited
circumstance, i.e., “[w]hen a later unexpected change . . .
makes impossible or impractical the continued use of the
property for conservation purposes.” This provision is
similarly invalid, they argue, if § 170(h)(2)(C) categorically
prohibits property from being swapped in and out of a
conservation easement. Appellants’ Br. 20-21. This argument
also fails. That the regulations permit the donee organization
to exchange restricted property under conditions both strict and
rare fails to undercut the requirement that the donor grant an
easement to a single, defined parcel. Indeed, that the
regulations narrowly limit the ability of an easement to change
after donation counsels against permitting a donor to contract
for the right to make such changes in advance of the donation.
13
easement only when that easement restricts the use of the
donated property in perpetuity. Because the Easement here fails
to meet this requirement, it is ineligible to form the basis for
a charitable deduction under § 170(h)(2)(C).
IV.
The Belks offer two reasons why we should reject this
straightforward application of statutory text.
First, they maintain that out-of-circuit cases support the
notion that § 170(h)(2)(C) does not require that restrictions
attach to a single, defined parcel. See Appellants’ Br. 21-23
(citing Kaufman v. Shulman, 687 F.3d 21 (1st Cir. 2012);
Commissioner v. Simmons, 646 F.3d 6 (D.C. Cir. 2011)). In those
cases, the courts found that preservation easements covering the
facades of historic buildings, which reserved to the donee the
right to abandon the easement, did not violate § 170(h)(5)(A)
given the negligible possibility that the donee would actually
abandon its rights under the easement.
According to the Belks, Simmons and Kaufman demonstrate
that courts have approved deductions for easements that “put the
perpetuity of the conservation easement at far greater risk than
the clause at issue in this case.” Appellants’ Br. 23. But
this argument misses the critical distinction between those
cases and this one. The Simmons and Kaufman courts considered
14
whether the easements before them satisfied the requirement in
§ 170(h)(5)(A) that the conservation purpose be protected “in
perpetuity.” See Simmons, 646 F.3d at 9-10; Kaufman, 687 F.3d
at 27-28. Here, the question is whether the Easement satisfies
the requirement in § 170(h)(2)(C) that the use restrictions on
the parcel be granted “in perpetuity.” Though both requirements
speak in terms of “perpetuity,” they are not one and the same.
The provision at issue here, § 170(h)(2)(C), governs the grant
of the easement itself, while the provision at issue in Simmons
and Kaufman, § 170(h)(5)(A), governs its subsequent enforcement.
Thus, Simmons and Kaufman plausibly stand only for the
proposition that a donation will not be rendered ineligible
simply because the donee reserves its right not to enforce the
easement. They do not support the Belks’ view that the grant of
a conservation easement qualifies for a charitable deduction
even if the easement may be relocated. Indeed, as we have
explained, such a holding would violate the plain meaning of
§ 170(h)(2)(C).
The second reason the Belks offer for ignoring the clear
statutory language of § 170(h)(2)(C) is equally unpersuasive.
They contend that because North Carolina law permits parties to
amend an easement, the Tax Court’s logic would render all
conservation easements in North Carolina ineligible under
§ 170(h). See Appellants’ Br. 32-37. But whether state
15
property and contract law permits a substitution in an easement
is irrelevant to the question of whether federal tax law permits
a charitable deduction for the donation of such an easement.
Contrary to the Belks’ suggestion, accepting this fact does not
require a conclusion that “no conservation easement could
qualify for a deduction unless the applicable state law
prohibited amendments to make a substitution of property.” Id.
at 36. Rather, § 170(h)(2)(C) requires that the gift of a
conservation easement on a specific parcel of land be granted in
perpetuity to qualify for a federal charitable deduction,
notwithstanding the fact that state law may permit an easement
to govern for some shorter period of time. Thus, an easement
that, like the one at hand, grants a restriction for less than a
perpetual term, may be a valid conveyance under state law, but
is still ineligible for a charitable deduction under federal
law.
V.
Finally, the Belks argue that even if we find the
substitution provision in the Easement prevents it from
satisfying the requirements of § 170(h)(2)(C), the savings
clause nonetheless renders the Easement eligible for a
deduction. The savings clause provides in pertinent part that
the Trust:
16
shall have no right or power to agree to any
amendments . . . that would result in this
Conservation Easement failing to qualify . . . as a
qualified conservation contribution under Section
170(h) of the Internal Revenue Code and applicable
regulations.
The Belks contend that if we should “determine that Section
170(h)(2)(C) precludes substitutions of property,” as we have,
this savings clause “operates to ‘save’ [their] deduction by
precluding the parties from executing an amendment allowing such
a substitution of property.” Reply Br. 20. In other words, the
Belks argue that the savings clause negates a right clearly
articulated in the Easement -- their right to substitute
property -- but only if triggered by an adverse determination by
this court. We decline to give the savings clause such effect.
The Belks properly acknowledge that “the IRS and the courts
have rejected ‘condition subsequent’ savings clauses, which
revoke or alter a gift following an adverse determination by the
IRS or a court.” Appellants’ Br. 39 (citing Commissioner v.
Procter, 142 F.2d 824, 827-28 (4th Cir. 1944)). They maintain,
however, that the savings clause here is not a “condition
subsequent” savings clause, but simply “an interpretive clause
meant to insure that [the Trust] makes no amendment to the
Conservation Easement . . . that would be inconsistent with the
overriding intention of the parties.” Id. The Belks are wrong.
17
A condition subsequent rests on a future event, “the
occurrence of which terminates or discharges an otherwise
absolute contractual duty.” 30 Williston on Contracts § 77:5
(4th ed.). When a savings clause provides that a future event
alters the tax consequences of a conveyance, the savings clause
imposes a condition subsequent and will not be enforced. See
Procter, 142 F.2d at 827; Estate of Christiansen v.
Commissioner, 130 T.C. 1, 13 (2008), aff’d, 586 F.3d 1061 (8th
Cir. 2009). As the IRS has explained, clauses that seek to
“recharacterize the nature of the transaction in the event of a
future” occurrence “will be disregarded for federal tax
purposes.” I.R.S. Tech. Adv. Mem. 2002-45-053 (Nov. 8, 2002).
In Procter, which the Belks do not suggest was incorrectly
decided, the taxpayer sought to avoid the federal gift tax by
including a savings clause within the trust conveying the gift.
That clause provided that “[t]he settlor is . . . satisfied that
the present transfer is not subject to Federal gift tax,” but
added that if “a competent federal court of last resort”
determined “that any part of the transfer . . . is subject to
gift tax,” that part “shall automatically be deemed not to be
included in the conveyance” and so not subject to gift tax.
Procter, 142 F.2d at 827. We rejected the taxpayer’s argument
out of hand, holding that tax consequences could not “be avoided
by any such device as this.” Id. We explained that the
18
taxpayer’s attempt to avoid tax, by providing the gift “shall be
void” as to property later held “subject to the tax,” was
“clearly a condition subsequent,” and involved the “sort of
trifling with the judicial process [that] cannot be sustained.”
Id.So it is here. The Belks’ Easement, by its terms, conveys
an interest in real property to the Trust. The savings clause
attempts to alter that interest in the future if the Easement
should “fail[] to qualify as a . . . qualified conservation
contribution under Section 170(h).” In seeking to invoke the
savings clause, the Belks, like the taxpayer in Procter, ask us
to “void” the offending substitution provision to rescue their
tax benefit.
The Belks’ attempt to distinguish Procter fails. They find
significant the fact that the savings clause there altered the
conveyance “following an adverse IRS determination or court
judgment,” while the savings clause here does not expressly
invoke the IRS or a court. Appellants’ Br. 39. This is a
distinction without a difference. Though not couched in terms
of an “adverse determination” by the IRS or a court, the Belks’
savings clause operates in precisely the same manner as that in
Procter. The Easement plainly permits substitutions unless and
until those substitutions “would result” in the Easement’s
“failing to qualify . . . under Section 170(h) of the Internal
19
Revenue Code,” a determination that can only be made by either
the IRS or a court. Indeed, relying on Procter, the IRS has
found a clause void as a condition subsequent notwithstanding
its failure to reference determination by a court. See Rev.
Rul. 65-144, 1965-1 C.B. 442, 1965 WL 12880. The Belks do not
suggest that the IRS erred in so concluding, nor do they attempt
to distinguish that clause from their own.
They do contend, however, that their savings clause is
simply “an interpretive clause” meant to ensure the “overriding
intention” of the parties that the Easement qualify as a
charitable deduction. Appellants’ Br. 39. We are not
persuaded. When a clause has been recognized as an
“interpretive” tool, it is because it simply “help[ed]
illustrate the decedent’s intent” and was not “dependent for
[its] operation upon some subsequent adverse action by the
Internal Revenue Service.” I.R.S. Tech. Adv. Mem. 79-16-006
(1979) (distinguishing Procter); see also Estate of Cline v.
Commissioner, 43 T.C.M. (CCH) 607 (T.C. 1982) (clause valid to
interpret “ambiguous . . . language in a poorly drafted . . .
agreement,” but not to “change the property interests otherwise
created”); Rev. Rul. 75-440, 1975-2 C.B. 372, 1975 WL 34994 at
*2 (clause “relevant . . . only because it helps indicate the
testator’s intent not to give . . . a disqualifying power”
(emphasis added)).
20
In contrast to those situations, the Belks’ intent to
retain “a disqualifying power” is clear from the face of the
Easement. There is no open interpretive question for the
savings clause to “help” clarify. If the Belks’ “overriding
intent[]” had been, as they suggest, merely for the Easement to
qualify for a tax deduction under § 170(h), they would not have
included a provision so clearly at odds with the language of
§ 170(h)(2)(C). In fact, the Easement reflects the Belks’
“overriding intent[]” to create an easement that permitted
substitution of the parcel -- in violation of § 170(h)(2)(C) --
and to jettison the substitution provision only if it
subsequently caused the donation to “fail[] to qualify . . . as
a qualified conservation contribution under Section 170(h).”
Thus, the Belks ask us to employ their savings clause not to
“aid in determining [their] intent,” Rev. Rul. 75-440, but to
rewrite their Easement in response to our holding. This we will
not do. 3
3
In a last-ditch effort, the Belks further argue that the
savings clause is designed “to accommodate evolving . . .
interpretation of Section 170(h)” so that the Easement
“continue[s] to be consistent” with their intent to comply with
that provision. Reply Br. 20. But the statutory language of
§ 170(h)(2)(C) has not “evolved” since the provision was enacted
in 1980. See Pub. L. 96-541, 94 Stat. 3204 (Dec. 17, 1980).
The simple truth is this: the Easement was never consistent with
§ 170(h), a fact that brings with it adverse tax consequences.
The Belks cannot now simply reform the Easement because they do
not wish to suffer those consequences.
21
Indeed, we note that were we to apply the savings clause as
the Belks suggest, we would be providing an opinion sanctioning
the very same “trifling with the judicial process” we condemned
in Procter. 142 F.2d at 827. Moreover, providing such an
opinion would dramatically hamper the Commissioner’s enforcement
power. If every taxpayer could rely on a savings clause to
void, after the fact, a disqualifying deduction (or credit),
enforcement of the Internal Revenue Code would grind to a halt.
VI.
For the foregoing reasons, the judgment of the Tax Court is
AFFIRMED.
22