Summary Judgment Denied in Conservation Easement Cases

GREEN VALLEY INVESTORS, LLC, BOBBY A. BRANCH, TAX MATTERS PARTNER, ET. AL.,
Petitioners
v.
COMMISSIONER OF INTERNAL REVENUE,
Respondent

United States Tax Court

ORDER

On December 14, 2021, petitioners filed motions for partial summary judgment regarding qualified appraisers in each of these consolidated cases. Petitioners' motions seek a favorable ruling from this Court on two issues: (i) whether Martin H. Van Sant and Thomas F. Wingard were qualified appraisers under the Code¹, and applicable regulations, on March 10, 2015 and (ii) whether the appraisal reports they prepared for Green Valley Investors, LLC (Green Valley); Vista Hill Investments, LLC (Vista Hill); Big Hill Partners, LLC (Big Hill); and Tick Creek Holdings, LLC (Tick Creek) (collectively, referred to as the “LLCs”), respectively, complied with the requirements of Treas. Reg. § 1.170A-13(c)(3). With the motions, petitioners submitted the declarations of Martin H. Van Sant, Thomas F. Wingard and Tricia Tise, along with attached exhibits.

On February 11, 2022, respondent filed his objection to petitioners' motions for partial summary judgment regarding qualified appraisers in each of these consolidated cases.

For the reasons discussed below, the Court will deny, without prejudice, petitioners' motions for partial summary judgment regarding qualified appraisers.

Background

Petitioners argue that as of March 10, 2015, Martin H. Van Sant and Thomas F. Wingard were each highly experience appraisers who held professional designations issued by the State of North Carolina and the Appraisal Institute. Both Mr. Van Sant and Mr. Wingard performed appraisals for compensation and satisfied the requirements of a qualified appraiser under Treas. Reg. § 1.170A-13(c)(3). Finally, both provided the required declarations to demonstrate his respective formal education and experience, and neither have been prohibited from practicing before the IRS. Petitioners also contend how respondent — based on discovery responses — has conceded that the appraisals in question satisfy the requirements under Treas. Reg. § 1.170A-13(c)(3).

In his written objection, respondent contends genuine issues of material fact remain regarding whether the appraisals in question were conducted in accordance with generally accepted appraisal standards and otherwise comply with regulatory requirements, precluding summary adjudication of the issues sought in petitioners' motions for partial summary judgment. As factual support for his written objection, respondent cites to the May 1, 2020, declaration of Emily J. Giometti, the October 9, 2020, declaration of Emily J. Giometti, and exhibits A23-A28 to the January 26, 2022, declaration of Emily J. Giometti.

Respondent questions whether Mr. Van Sant and Mr. Wingard performed the appraisals, since respondent contends that Mr. McCalip, who is not an accredited appraiser, may have assisted in preparation of the appraisals. Respondent also disputes the factual representations of petitioners, since respondent notes how he has not yet had the opportunity to speak with either Mr. Van Sant or Mr. Wingard regarding their qualifications, appraising activities, results they derived from information furnished by Mr. McCalip, and understanding regarding the subject properties transaction history and profit potential. Essentially, respondent notes that “it is for precisely this purpose that respondent filed motions to compel their deposition testimony.”

Analysis

The purpose of summary judgment is to expedite litigation and avoid unnecessary and time-consuming trials. See FPL Grp., Inc. & Subs. v. Commissioner, 116 T.C. 73, 74 (2001). We may grant summary judgment when there is no genuine dispute of material fact and a decision may be rendered as a matter of law. Rule 121(b); Elec. Arts, Inc. v. Commissioner, 118 T.C. 226, 238 (2002). However, it is not a substitute for trial; it should not be used to resolve genuine disputes over material factual issues. Id. When determining whether to grant summary judgment, we must view factual materials and inferences drawn therefrom in the light most favorable to the nonmoving party. See FPL Grp., Inc. & Subs., 116 T.C. at 75; Bond v. Commissioner, 100 T.C. 32, 36 (1993).

Where a contribution of property is valued in excess of $500,000, the taxpayer must obtain and attach to his return “a qualified appraisal of such property.” I.R.C. § 170(f)(11)(D). An appraisal is 'qualified' if it is “conducted by a qualified appraiser in accordance with generally accepted appraisal standards” and meets requirements set forth in “regulations or other guidance prescribed by the Secretary.” I.R.C. § 170(f)(11)(E)(i). In order to be a 'qualified appraiser,' an individual must have “earned an appraisal designation from a recognized professional appraiser organization or ha[ve] otherwise met minimum education and experience requirements set forth in regulations prescribed by the Secretary.” I.R.C. § 170(f)(11)(E)(ii)(I). Such individual must “regularly perform[ ] appraisals for which . . . [he] receives compensation” and must meet “such other requirements as may be prescribed by the Secretary.” I.R.C. § 170(f)(11)(E)(ii)(II) and (III). The individual also must “demonstrate[ ] verifiable education and experience in valuing the type of property subject to the appraisal.” I.R.C. § 170(f)(11)(E)(iii)(I).

The regulations provide that an appraisal is 'qualified' only if it is made “not earlier than 60 days prior to the date of the contribution” and is “prepared, signed, and dated by a qualified appraiser.” Treas. Reg. § 1.170A-13(c)(3)(i)(A) and (B). The regulations specify information that a 'qualified appraisal' must include, e.g., a description of the property and its physical condition, the date of the appraisal and the expected contribution, a statement that the appraisal is made for income tax purposes, the method of valuation used to determine fair market value, and the qualifications of the appraiser including his or her “background, experience, education, and membership, if any, in professional appraisal associations.” Treas. Reg. § 1.170A-13(c)(3)(ii).

When considering the elements of a qualified appraisal and appraisers, it appears that petitioners may have satisfied these legal requirements. However, viewing the facts and inferences in a light most favorable to respondent, we cannot conclude such as a matter of law, since there remains material facts in dispute between the parties. Respondent sought to compel the depositions of Mr. Van Sant, Mr. Wingard, and Mr. McCalip — which petitioners objected to — and this Court denied, without prejudice, by order served on February 11, 2022. This Court acknowledges that it would likely benefit from this cross examination testimony from these witnesses prior to ruling on the issues before the Court. Accordingly, we are compelled to deny petitioners' motions for partial summary judgment at this time.

Considering the foregoing, it is

ORDERED that petitioners motions for partial summary judgment regarding qualified appraisers, filed in each of these consolidated cases on December 14, 2021, are denied, without prejudice.

(Signed) Christian N. Weiler
Judge