                              T.C. Memo. 2013-172



                        UNITED STATES TAX COURT



             KAYLN M. CARPENTER, ET AL.,1 Petitioners v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent*



      Docket Nos. 15589-10, 15590-10,           Filed July 25, 2013.
                  15591-10.



      Larry D. Harvey, for petitioners.

      Sara Jo Barkley and Luke D. Ortner, for respondent.




      1
      Cases of the following petitioners are consolidated herewith: Scott A. Van
Wyhe, docket No. 15590-10, and John C. and Sharon L. McSween, docket No.
15591-10.
      *
      This opinion supplements our prior opinion, Carpenter v. Commissioner,
T.C. Memo. 2012-1.
                                       -2-

[*2]             SUPPLEMENTAL MEMORANDUM OPINION


       HAINES, Judge: This case is before the Court on petitioners’ motion to

reconsider our opinion in Carpenter v. Commissioner, T.C. Memo. 2012-1

(Carpenter I), pursuant to Rule 161.2 Respondent objects. In their motion

petitioners allege that this Court erred in relying on Kaufman v. Commissioner,

136 T.C. 294 (2011) (Kaufman II), which was affirmed in part, vacated in part,

and remanded in part by the Court of Appeals for the First Circuit in Kaufman v.

Shulman, 687 F.3d 21 (1st Cir. 2012) (Kaufman III).3 Petitioners make various

other claims which we will address below.



       2
       Unless otherwise indicated, all section references are to the Internal
Revenue Code, as amended and in effect for the years at issue, and all Rule
references are to the Tax Court Rules of Practice and Procedure. Amounts are
rounded to the nearest dollar.
       3
        The IRS originally filed a motion for summary judgment with this Court on
January 15, 2010. In ruling on the motion for summary judgment in Kaufman v.
Commissioner, 134 T.C. 182 (2010) (Kaufman I), we disallowed any deductions
for the easement contribution but found genuine issues of material fact remaining
with regard to the cash contribution deduction and the IRS’ imposition of
penalties. In a second Opinion after a trial on the reserved issues, this Court on
April 4, 2011, in Kaufman v. Commissioner, 136 T.C. 294 (2011) (Kaufman II),
aff’d in part, vacated in part and remanded in part, 687 F.3d 21 (1st Cir. 2012),
reaffirmed its ruling on the easement but held that the taxpayers were entitled to
deduct their $16,840 cash contribution on their 2004 return (as opposed to their
2003 return) and were liable for only a small penalty for negligence in claiming
the deduction for the earlier year.
                                         -3-

[*3]                                 Background

       In Carpenter I we gave a background of the facts, which we incorporate

herein by reference. The facts were based upon the parties’ pleadings, affidavits,

and exhibits in support of and in opposition to the motion for partial summary

judgment. The facts were stated solely for the purpose of deciding the motion and

not as findings of fact in this case. For convenience and clarity, we repeat below

the facts relevant to our disposition of petitioners’ motion for reconsideration, and

we supplement those facts as appropriate to provide a complete background

statement.

       The facts of all petitioners’ cases, though not identical, are substantially

similar. On or about December 23, 2003, each petitioner acquired a parcel or

parcels of land in Teller County, Colorado, from Sixty Seven, LLC (Sixty Seven).

Petitioners held their parcels in fee simple. On or about December 24, 2003, each

petitioner conveyed a conservation easement to Greenlands, a charitable nonprofit

Colorado corporation which qualifies as a tax-exempt nonprofit organization

under sections 501(c)(3) and 170(b)(1)(A)(iv).4


       4
       The McSweens owned two parcels of land in Teller County. They
conveyed a conservation easement over the first parcel of land on or about
December 24, 2003, and conveyed a conservation easement over the second parcel
on or about January 29, 2004.
                                       -4-

[*4] Petitioner Carpenter claimed a $385,600 charitable contribution deduction

on her 2004 Federal income tax return. Petitioner Van Wyhe claimed a $272,998

charitable contribution deduction on his 2004 Federal income tax return, a

$265,247 charitable contribution deduction carryover on his 2005 Federal income

tax return, and a $262,876 charitable contribution deduction carryover on his 2006

Federal income tax return. The McSweens claimed a $336,500 charitable

contribution deduction on their 2003 joint Federal income tax return, a $336,500

charitable contribution deduction on their 2004 joint Federal income tax return, a

$311,776 charitable contribution deduction carryover on their 2004 joint Federal

income tax return, and a $612,844 charitable contribution deduction carryover on

their 2005 joint Federal income tax return. All of the Federal income tax returns

were timely filed.

      All of the conservation easement deeds were virtually identical and

contained the following provision for extinguishment of the easement:

      Extinguishment--If circumstances arise in the future such that render
      the purpose of this Conservation Easement impossible to accomplish,
      this Conservation Easement can be terminated or extinguished,
      whether in whole or in part, by judicial proceedings, or by mutual
      written agreement of both parties, provided no other parties will be
      impacted and no laws or regulations are violated by such termination.
      * * * [Emphasis added.]
                                        -5-

[*5] A notice of deficiency was mailed to each petitioner disallowing the

charitable contribution deductions. Respondent cited the emphasized language

above in determining that petitioners had not met the requirement of section

1.170A-14(g)(6)(i), Income Tax Regs., that their conservation easements be

granted in perpetuity. Each petitioner timely filed a petition with this Court.

      In Carpenter I, respondent moved for partial summary judgment on the

grounds that petitioners’ conservation easements were not protected in perpetuity

and thus were not qualified conservation contributions. Specifically, respondent

argued that petitioners failed to meet the requirements of section 1.170A-

14(g)(6)(i), Income Tax Regs., because petitioners and Greenlands can mutually

agree to extinguish the conservation easements. We held that the provisions of

section 1.170A-14(g)(6)(i), Income Tax Regs., requiring a judicial proceeding to

extinguish a conservation easement may not be avoided and that petitioners had

failed to satisfy the requirements of section 1.170A-14(g)(6)(i), Income Tax Regs.

As a result, we held in favor of respondent and granted the motion for partial

summary judgment.
                                        -6-

[*6]                                 Discussion

I.     Motions To Reconsider

       A motion to reconsider is governed by Rule 161. Rule 161 establishes a

filing deadline but provides no guidance on when the Court should grant or deny a

motion to reconsider. In the absence of more specific guidance, we look to

caselaw and the Federal Rules of Civil Procedure. See Rule 1(b).

       The decision to grant a motion to reconsider lies within the discretion of the

Court. Estate of Quick v. Commissioner, 110 T.C. 440, 441 (1998). Motions to

reconsider are generally “intended to correct substantial errors of fact or law and

allow the introduction of newly discovered evidence that the moving party could

not have introduced by the exercise of due diligence in the prior proceeding.”

Knudsen v. Commissioner, 131 T.C. 185, 185 (2008). “Reconsideration is not the

appropriate forum for rehashing previously rejected legal arguments or tendering

new legal theories to reach the end result desired by the moving party.” Estate of

Quick v. Commissioner, 110 T.C. at 441-442.

       Importantly, an intervening change in the law can warrant the granting of a

motion to reconsider. See Alioto v. Commissioner, T.C. Memo. 2008-185. In

Alioto v. Commissioner, T.C. Memo. 2006-199, the Court held that it lacked

jurisdiction over “stand-alone” section 6015(f) cases. After Congress expanded
                                         -7-

[*7] the Court’s jurisdiction to include such cases, see Tax Relief and Health Care

Act of 2006, Pub. L. No. 109-432, div. C, sec. 408, 120 Stat. at 3061, the taxpayer

filed timely motions to reconsider and to vacate, which the Court granted, see

Alioto v. Commissioner, T.C. Memo. 2008-185 (“We agree that the Court

correctly applied the caselaw as it existed at the time the Court issued Alioto I;

however, we disagree that the motion for reconsideration should be denied. After

the Court’s decision in Alioto I the law and the Court’s jurisdiction changed.” (Fn.

ref. omitted.)).

       Petitioners ask us to grant the motion to reconsider in the light of the partial

vacating of Kaufman II by the Court of Appeals for the First Circuit. See

Kaufman III, 687 F.3d 21.

       In their motion for reconsideration petitioners argue that this Court should

follow the approach taken by the Court of Appeals for the First Circuit and

reconsider its decision. Specifically, petitioners argue that: (1) the conservation

easement deeds protected the proceeds to be paid to Greenlands in perpetuity upon

termination of the conservation easement and thus under the approach taken in

Kaufman III the conservation easement deeds satisfied the requirements of section

1.170A-14(g), Income Tax Regs.; and (2) Colorado law creates restrictions that

protect the conservation easement and any proceeds upon termination of such
                                         -8-

[*8] conservation easement and that such protection is greater than the protection

provided for in Kaufman III; thus this Court should reconsider its opinion in

Carpenter I. We take each of these arguments in turn.

II.   Legal Background

      A.     Qualified Conservation Contribution

      A taxpayer is generally allowed a deduction for any charitable contribution

made during the taxable year. Sec. 170(a)(1). A charitable contribution is a gift of

property to a charitable organization made with charitable intent and without the

receipt or expectation of receipt of adequate consideration. See Hernandez v.

Commissioner, 490 U.S. 680, 690 (1989); United States v. Am. Bar Endowment,

477 U.S. 105, 116-118 (1986); see also sec. 1.170A-1(h)(1) and (2), Income Tax

Regs. While a taxpayer is generally not allowed a charitable contribution

deduction for a gift of property consisting of less than an entire interest in that

property, an exception is made for a “qualified conservation contribution.” See

sec. 170(f)(3)(A), (B)(iii).

      A “qualified conservation contribution” is a contribution (1) of a “qualified

real property interest” (2) to a “qualified organization” (3) which is made

“exclusively for conservation purposes.” Sec. 170(h)(1); see also sec. 1.170A-

14(a), Income Tax Regs. Respondent concedes that there was a contribution of a
                                         -9-

[*9] qualified real property interest and that at the time of the contribution

Greenlands was a qualified organization under section 170(h)(3). Therefore, we

focus on the third requirement; i.e., whether petitioners’ contributions of the

conservation easements to Greenlands were exclusively for conservation purposes.

      A contribution is made exclusively for conservation purposes only if it

meets the requirements of section 170(h)(5). Glass v. Commissioner, 124 T.C.

258, 277 (2005), aff’d, 471 F.3d 698 (6th Cir. 2006). Section 170(h)(5)(A)

provides that “[a] contribution shall not be treated as exclusively for conservation

purposes unless the conservation purpose is protected in perpetuity.” Section

1.170A-14(g), Income Tax Regs., elaborates on the enforceability-in-perpetuity

requirement. Paragraph (g)(1) provides generally that in order for a conservation

easement to be enforceable in perpetuity, the “interest in the property retained by

the donor * * * must be subject to legally enforceable restrictions * * * that will

prevent uses of the retained interest inconsistent with the conservation purposes of

the donation.” The various subparagraphs of paragraph (g) set forth many of these

legally enforceable restrictions. Mitchell v. Commissioner, 138 T.C. 324, 33

(2012).

      Paragraph (g)(2) addresses mortgages and in pertinent part provides that “no

deduction will be permitted * * * for an interest in property which is subject to a
                                         - 10 -

[*10] mortgage unless the mortgagee subordinates its rights in the property to the

right of the * * * [donee] organization to enforce the conservation purposes of the

gift in perpetuity.”

      Paragraph (g)(3) is entitled “Remote future event” and addresses events that

may defeat the property interest that has passed to the donee organization. It

provides that a deduction will not be disallowed merely because on the date of the

gift there is the possibility that the interest will be defeated so long as on that date

the possibility of defeat is so remote as to be negligible.

      Paragraph (g)(6) is entitled “Extinguishment” and recognizes that after the

donee organization’s receipt of an interest in property, an unexpected change in

the conditions surrounding the property can make impossible or impractical the

continued use of the property for conservation purposes. Subdivision (i) of

paragraph (g)(6) provides in pertinent part:

      If a subsequent unexpected change in the conditions surrounding the
      property that is the subject of a donation under this paragraph can
      make 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 by the donee
      organization in a manner consistent with the conservation purposes of
      the original contribution.
                                        - 11 -

[*11] Subdivision (ii) of paragraph (g)(6) is entitled “Proceeds” and, in pertinent

part, provides:


      for a deduction to be allowed under this section, at the time of the gift
      the donor must agree that the donation of the perpetual conservation
      restriction gives rise to a property right, immediately vested in the
      donee organization, with a fair market value that is at least equal to
      the proportionate value that the perpetual conservation restriction at
      the time of the gift bears to the value of the property as a whole at that
      time. * * * For purposes of this paragraph (g)(6)(ii), that
      proportionate value of the donee’s property rights shall remain
      constant. Accordingly, when a change in conditions gives rise to the
      extinguishment of a perpetual conservation restriction under
      paragraph (g)(6)(i) of this section, the donee organization, on a
      subsequent sale, exchange, or involuntary conversion of the subject
      property, must be entitled to a portion of the proceeds at least equal to
      that proportionate value of the perpetual conservation restriction
      ***

      B.     Carpenter I

      In Carpenter I, petitioners first argued that section 1.170A-14(g)(6)(i),

Income Tax Regs., should be read in tandem with section 1.170A-14(g)(3),

Income Tax Regs. Petitioners claimed that the conditions necessary for

extinguishment of the conservation easements are not possible or the possibility is

so remote as to be negligible. Thus, petitioners argued that the possibility of

extinguishment by mutual agreement of the parties had to be disregarded under the

so-remote-as-to-be-negligible standard in determining whether the conservation
                                        - 12 -

[*12] easement was enforceable in perpetuity. We relied on our previous holding

in Kaufman II to find that the so-remote-as-to-be-negligible standard does not

modify section 1.170A-14(g)(6)(i), Income Tax Regs.

      Second, petitioners argued that the donations created charitable trusts or

restricted gifts which implicate the doctrine of cy pres. Under cy pres, the fact that

termination of the conservation easements would require a judicial proceeding

would prevent the parties from extinguishing the easements by mutual agreement.

We found that petitioners’ contribution of conservation easements did create

restricted gifts under Colorado law; however, we found the doctrine of cy pres

inapplicable to the restricted gifts. Thus, we found that petitioners could terminate

their conservation easements through mutual consent of all the parties.

      Finally, we found that such extinguishment by mutual consent of the parties

violates the requirements of section 1.170A-14(g)(6)(i), Income Tax Regs., as

extinguishment by mutual consent of the parties does not guarantee that the

conservation purpose of the donated property will continue to be protected in

perpetuity. We noted that the “‘restrictions [in a deed] are supposed to be

perpetual in the first place, and the decision to terminate them should not be solely

by interested parties. With the decision-making process pushed into a court of

law, the legal tension created by such judicial review will generally tend to create
                                       - 13 -

[*13] a fair result.’” Carpenter I, slip op. at 18-19 (quoting Small, Federal Tax

Law of Conservation Easements 16-4 (1986)).

      C.     Kaufman III

      In 1999 Lorna and Gordon Kaufman, the taxpayers, bought a single-family

rowhouse in the South End of Boston subject to local restrictions. In 2003 the

taxpayers contributed to a donee organization a facade easement on their single-

family rowhouse. At the time of contribution, the property was subject to a

mortgage. The mortgagee agreed to subordinate the mortgage to the conservation

easement deed in favor of the donee organization; however, the mortgagee

retained a “prior claim” to all proceeds of condemnation and to all insurance

proceeds resulting from any casualty of the property. The taxpayers claimed a

charitable contribution deduction equal to the value they assigned to the facade

easement. The Commissioner disallowed the deduction because the taxpayers had

failed to meet the requirement of section 1.170A-14(g)(6)(ii), Income Tax Regs.,

that the charity receive a proportionate share of proceeds following judicial

extinguishment of the facade easement and a subsequent sale of the property.

      In Kaufman II, the taxpayers argued that though the mortgagee may have

had a prior claim to condemnation proceeds over the donee, that did not absolve

Lorna Kaufman of her obligation to make good on the donee’s entitlement to a pro
                                        - 14 -

[*14] rata share of the proceeds realized from the sale or involuntary conversion of

the property. As a result, the taxpayers claimed the various agreements satisfied

the requirements of section 1.170A-14(g)(6)(ii), Income Tax Regs. This Court

found the donee’s contractual right against the taxpayer to a share of the proceeds

to be insufficient to satisfy the requirements of section 1.170A-14(g)(6), Income

Tax Regs., stating: “[W]e think it the intent of the drafters of section 1.170A-

14(g)(6), Income Tax Regs., that the donee have a right to a share of the proceeds

and not merely a contractual claim against the owner of the previously servient

estate.” Kaufman II, 136 T.C. at 309.

      The taxpayers also argued that section 1.170A-14(g)(6), Income Tax Regs.,

should be read in tandem with section 1.170A-14(g)(3), Income Tax Regs. The

taxpayers hypothesized a very low probability of occurrence of a set of events that

would deprive the charity of its proportional share of proceeds following judicial

extinguishment of the facade easement and subsequent sale of the property. They

concluded that the possibility of such deprivation was “so remote as to be

negligible” and, thus, had to be disregarded under the so-remote-as-to-be-

negligible standard in determining whether the facade easement was enforceable

in perpetuity.
                                        - 15 -

[*15] This Court in Kaufman II found that the so-remote-as-to-be-negligible

standard does not modify section 1.170A-14(g)(6)(ii), Income Tax Regs.

Specifically, we held that

      It is not a question as to the degree of improbability of the changed
      conditions that would justify judicial extinguishment of the
      restrictions. Nor is it a question of the probability that, in the case of
      judicial extinguishment following an unexpected change in
      conditions, the proceeds of a condemnation or other sale would be
      adequate to pay both the bank and * * * [the charity]. As we said in
      Kaufman v. Commissioner, 134 T.C. at 186, the requirement in
      section 1.170A-14(g)(6)(ii), Income Tax Regs., that * * * [the
      charity] be entitled to its proportionate share of the proceeds is not
      conditional: “Petitioners cannot avoid the strict requirement in
      section 1.170A-14(g)(6)(ii), Income Tax Regs., simply by showing
      that they would most likely be able to satisfy both their mortgage and
      their obligation to * * * [the charity].”

Kaufman II, 136 T.C. at 313. The Court of Appeals for the First Circuit agreed.

Kaufman III, 687 F.3d at 27.

      On appeal, the Court of Appeals for the First Circuit in Kaufman III held for

the taxpayers, finding the Commissioner’s reading of section 1.170A-14(g)(6),

Income Tax Regs., unreasonable. The Court of Appeals noted the superpriority of

tax liens to most prior claims and determined that the Commissioner’s reading of

section 1.170A-14(g)(6), Income Tax Regs., would defeat the purpose of the

statute. Specifically, the Court of Appeals stated:
                                        - 16 -

      [*16] The IRS reads the word “entitled” in the extinguishment
      regulation to mean “gets the first bite” as against the rest of the world,
      a view the Tax Court accepted in reading “entitled” to mean “ha[s] an
      absolute right.” Kaufman II, 136 T.C. at 313. But a grant that is
      absolute against the owner-donor is also an entitlement, Black’s Law
      Dictionary (7th ed. 1999) (“entitle” defined as “[t]o grant a legal right
      to”); Collins English Dictionary (10th ed. 2009) (“to give (a person)
      the right to do or have something”), and almost the same as an
      absolute one where third-party claims (here, the bank’s or the city’s)
      are contingent and unlikely.

Kaufman III, 687 F.3d at 27.

      The Commissioner also argued that the taxpayers failed to meet the

requirements of section 1.170A-14(g)(1), Income Tax Regs. A provision in the

agreement between the taxpayers and the donee stated that nothing in the

conservation easement deed of trust shall be construed to limit the donee’s right to

give its consent to changes in the conservation easement deed or to abandon some

or all of its rights thereunder. The Commissioner argued that this provision was a

blank check to the donee to consent to any type of change, irrespective of its

compatibility with the donation’s conservation purpose; thus, the easement failed

to include the necessary restrictions that would prevent uses inconsistent with the

conservation purpose as required by section 1.170A-14(g)(1), Income Tax Regs.

      The Court of Appeals rejected the Commissioner’s argument, citing a

similar argument made in Commissioner v. Simmons, 646 F.3d 6, 10 (D.C. Cir.
                                         - 17 -

[*17] 2011). The Court of Appeals held that “[t]he language of paragraph (g)(1)

nowhere suggests the stringent outcome that the IRS seeks to ascribe to it and the

consequences of the reading would be to deprive the donee organization of

flexibility to deal with remote contingencies.” Kaufman III, 687 F.3d at 28.

III.   Whether Kaufman III Requires This Court To Reconsider Its Opinion in
       Carpenter I

       Petitioners argue that the Court of Appeals for the First Circuit’s opinion in

Kaufman III is an intervening change in law and requires this Court to reconsider

its opinion in Carpenter I. Specifically, petitioners argue that in the light of the

Court of Appeals for the First Circuit’s emphasis on the destination of proceeds

upon extinguishment of a conservation easement in Kaufman III, this Court should

take an overall approach in analyzing the in-perpetuity requirement of section

170(h)(5)(A) and section 1.170A-14(g), Income Tax Regs., and focus on any

proceeds resulting from an extinguishment of the conservation easements.

Petitioners argue that if there were extinguishments in this case, Greenlands would

receive its proportionate share of any proceeds from such extinguishment, that

Greenlands is bound by law to discharge its exempt purpose upon receipt of such

proceeds, and thus any such proceeds are protected in perpetuity, which is the goal

of the law. Respondent argues that Kaufman III does not apply to this case.
                                       - 18 -

[*18] Specifically, respondent argues that Kaufman III does not represent an

intervening change in law for purposes of this case, that petitioners have misread

Kaufman III, and that Kaufman III is not binding in the present case.5 We agree

with respondent.

      Kaufman III addressed legal issues different from the one present in this

case. As pertinent to this case, Kaufman III addressed the proper interpretation of

section 1.170A-14(g)(6)(ii), Income Tax Regs., and, in particular, the breadth of

the donee organization’s entitlement to proceeds from the sale, exchange, or

involuntary conversion of property following the judicial extinguishment of a

perpetual conservation restriction burdening the property. The court held that it

was sufficient that the donee organization have a right to postextinguishment

proceeds that was absolute against the owner-donee of the burdened property.

Kaufman III, 687 F.3d at 27. Greenlands’ right to postextinguishment proceeds


      5
        Under Golsen v. Commissioner, 54 T.C. 742, 757 (1970), aff’d, 445 F.2d
985 (10th Cir. 1971), the Court will follow the clearly established position of a
Court of Appeals to which a case is appealable. However, we will give effect to
our own views in cases appealable to courts that have not yet decided the issue.
Id. This case is appealable to the Court of Appeals for the Tenth Circuit absent
stipulation otherwise. See sec. 7482(b)(1)(A). The Court of Appeals for the Tenth
Circuit has not yet ruled on the issue of whether a taxpayer may mutually agree
with a donee organization to terminate a conservation easement when it becomes
impossible to carry out the purpose of the conservation easement and still meet the
requirements of sec. 1.170A-14(g)(6)(i), Income Tax Regs.
                                       - 19 -

[*19] was not at issue in Carpenter I and has not been raised by respondent as a

challenge to whether petitioners satisfied the in-perpetuity requirement of section

170(h)(5)(A) and section 1.170A-14(g), Income Tax Regs.

      The Court of Appeals for the First Circuit also rejected the Commissioner’s

argument that the provisions of section 1.170A-14(g)(1), Income Tax Regs., were

violated by terms in the relevant agreement allowing the donee organization to

give its consent to changes in the facade in question or to abandon some or all of

its rights under the agreement. Kaufman III, 687 F.3d at 27-28. The Court of

Appeals for the First Circuit agreed with the Court of Appeals for the D.C. Circuit,

which has said that type of clause is necessary to allow the donee organization “‘to

accommodate such change as may become necessary to make a building livable or

usable for future generations while still ensuring the change is consistent with the

conservation purpose of the easement.’” Id. at 28 (quoting Commissioner v.

Simmons, 646 F.3d at 10). No similar provision is at issue in this case.

      Petitioners would draw a general rule with respect to the perpetuity

requirement from the analysis of the Court of Appeals for the First Circuit in

Kaufman III. Petitioners state:

      Under paragraph (g)(6)(i), the conservation purpose of a preservation
      easement will “be treated as protected in perpetuity”--
      notwithstanding that changed circumstances might thwart that
                                       - 20 -

      [*20] purpose and result in extinguishment of the easement--if the
      restriction agreement provides that such a change in circumstances will be
      treated in a manner consistent with paragraph (g)(6).

They elaborate:

      Paragraph (g)(6) essentially provides that if an easement agreement
      entitles the donee to a share of proceeds equivalent to the
      proportionate value of the easement, to be used to carry out the
      general charitable purpose of the easement contribution in the event
      changed conditions require the easement’s extinguishment, the
      conservation purpose will be treated as if it were protected in
      perpetuity.

      Petitioners concede that the language of their conservation easement deeds

departs from the situation described in section 1.170A-14(g)(6), Income Tax Regs.,

by allowing extinguishment of the easement by mutual agreement of the parties to

the deeds. They suggest that that provision be disregarded; i.e., that “any

resolution of the ‘in perpetuity’ requirement should not be determined based upon

extraneous language contained in the conservation easement deed.” (Emphasis

added.) But petitioners have failed to show that the by-mutual-agreement

provision is extraneous; i.e., “Unrelated to the * * * matter at hand.” The American

Heritage Dictionary of the English Language 628 (5th ed. 2011). It is related to the

matter at hand; it allows the parties to the conservation deed to determine for

themselves whether conditions have changed and whether any change in conditions
                                         - 21 -

[*21] makes impossible or impractical the continued use of the property for

conservation purposes.

      Petitioners also argue that we stated in Carpenter I that “the regulation in

paragraph (g)(6) merely creates a safe harbor.” We stated in Carpenter I that “the

extinguishment regulation provides taxpayers with a guide, a safe harbor, by which

to create the necessary restrictions to guarantee protection of the conservation

purpose in perpetuity.” Id., slip op. at 18. To make our position clear,

extinguishment by judicial proceedings is mandatory. Therefore, we reject

petitioners’ argument that section 1.170A-14(g)(6), Income Tax Regs.,

contemplates any alternative to judicial extinguishment.

      Nor do we read Kaufman III as sanctioning petitioners’ argument of putting

into the hands of the parties to a conservation agreement the authority to determine

when to extinguish the conservation easement so long as the donee organization

gets its share of the proceeds of a subsequent sale. In fact, the First Circuit noted

that “paragraph (g)(6) only applies when the easement is ‘extinguished by judicial

proceeding’”. Kaufman III, 687 F.3d at 26 n.3. Indeed, petitioners concede the

indispensableness of a judicial determination in the penultimate paragraph of their

memorandum in support of their motion: “Paragraph (g)(6) ultimately requires that

the organization to which a preservation easement is donated must be entitled to a
                                        - 22 -

[*22] share of proceeds from any future sale of the property that occurs after a

court extinguishes the easement because changed circumstances have made it

impossible to carry out the easement’s preservation purpose.” (Emphasis added.)

      As a result of the foregoing, we find that the holding in Kaufman III does not

apply to this case and thus does not constitute an intervening change in law which

would justify granting the motion to reconsider.

IV.   Colorado Law

      Petitioners also argue that Colorado law creates restrictions that protect the

conservation easement and any proceeds upon termination of such conservation

easement and that because such protection is greater than the protection provided

for in Kaufman III, this Court should reconsider its opinion in Carpenter I. We

addressed petitioners’ argument with respect to Colorado law’s effect on the

conservation easement deeds in Carpenter I. Petitioners are now simply trying to

argue a new legal theory with respect to Colorado law. As we previously stated:

“Reconsideration is not the appropriate forum for rehashing previously rejected

legal arguments or tendering new legal theories to reach the end result desired by

the moving party.” Estate of Quick v. Commissioner, 110 T.C. at 441-442.
                                       - 23 -

[*23] V.    Conclusion

      Petitioners have not presented any newly discovered evidence or cited an

intervening change in the law that would warrant granting this motion for

reconsideration.

      In reaching our holdings herein, we have considered all arguments made,

and, to the extent not mentioned above, we conclude they are moot, irrelevant, or

without merit.

      To reflect the foregoing,


                                                      Appropriate orders will be

                                                issued.
