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Friday June 5, 2026

Bills / Cases / IRS

Conservation Easement Penalty Rejected

BAYOU SERPENT PROPERTY, LLC, OTEMANU LAND HOLDINGS, LLC, PARTNERSHIP REPRESENTATIVE,
Petitioner(s)
v.
COMMISSIONER OF INTERNAL REVENUE,
Respondent

United States Tax Court
Washington, DC 20217

ORDER AND DECISION

This case is before us on petitioner's unopposed Motion for Summary Judgment, fled September 17, 2025. In the light of respondent's acquiescence, and because our recent opinion in JM Assets, LP v. Commissioner, 165 T.C. No. 1 (2025) is squarely on point, we will grant petitioner's motion.

In 2019 Bayou Serpent Property, LLC (Bayou) donated a conservation easement and reported the donation on its 2019 Form 1065. On August 17, 2023, after issuing preliminary notices, respondent issued a Notice of Proposed Partnership Adjustment (NOPPA). The NOPPA proposed to disallow the charitable contribution deduction related to the conservation easement. On February 8, 2024, Bayou fled Form 8980, Partnership Request for Modification of Imputed Underpayments Under IRC Section 6225(c), seeking to modify the allocation of the charitable contribution to its partners. On September 23, 2024, respondent denied the modification request. After that date Bayou did not submit, and respondent did not request, additional information. On January 13, 2025, respondent issued the Notice of Final Partnership Adjustment (FPA).

Petitioner asserts that the FPA was untimely and so is invalid. Under IRC section 6235(a)(2), when a partnership seeks to modify an imputed underpayment under IRC section 6225(c), the Commissioner must issue the FPA no later than 270 days “after the date on which everything required to be submitted to the Secretary pursuant to such section is so submitted.” Petitioner argues that the applicable date was the date Bayou fled its modification request: February 8, 2024. After that date Bayou did not submit further information and respondent did not request additional information. Taken together those facts establish that Bayou submitted everything required to be submitted on February 8, 2024. See JM Assets, 165 T.C. at 14. Thus the deadline for issuing the FPA was 270 days later: November 4, 2024. Because respondent issued the FPA more than 60 days later on January 13, 2025, the FPA was untimely and so is invalid. See JM Assets, 165 T.C. at 18.

Accordingly it is

ORDERED AND DECIDED that petitioner's unopposed Motion for Summary Judgment, fled September 17, 2025, is granted, and this case is dismissed.

Jeffrey S. Arbeit
Judge