Clock Beats Commissioner: IRS Loses $70M Easement Case on Late FPA Under BBA

The Tax Court allowed Olivian Holdings LLC to keep its full $70 million 2018 conservation easement deduction and avoid roughly $26 million of tax and all penalties, solely because the IRS issued the final partnership adjustment (FPA) too late under IRC Section 6235.

What the Tax Court Did

·         The court entered a stipulated decision on March 27, 2026, granting Olivian its entire $70 million charitable contribution deduction for a Louisiana conservation easement for 2018.

·         As part of that decision, Olivian owes no related tax underpayment (about $26 million) and no accuracy-related or civil fraud penalties for that year.

·         The parties agreed that the IRS’s concession was based “solely” on the fact that the August 3, 2023 FPA was not timely under IRC Section 6235.

Statute of Limitations Issue

·         The notice at issue was a final partnership adjustment, which is how the IRS communicates adjustments to partnership items under the BBA regime.

·         Olivian argued that the IRS failed to issue the FPA within the applicable limitations period or obtain a valid extension.

·         By February 20, in its summary judgment motion, Olivian pointed out that the IRS had effectively stopped arguing timeliness and instead tried to rely on the fraud exception to keep the statute of limitations open.

·         On March 24, counsel for both sides signed a stipulation allowing the court to enter decision in Olivian’s favor based on the late notice.

IRS Fraud Allegations That Went Nowhere

·         In earlier filings, the IRS alleged Olivian was part of a fraudulent syndicated easement shelter selling inflated deductions based on overstated appraisals.

·         The IRS said managers knew of at least two lower appraisals, yet claimed an almost $700,000 per‑acre value for about 170 acres by positing infeasible clay mining, even though the land had been valued at under $3,000 per acre only 2.5 years earlier.

·         The IRS asserted that the managers never intended to operate a clay mine and instead used the property purely to market pre‑packaged, overstated tax deductions.

·         Despite these allegations, the court never reached the merits; the procedural defect (untimely FPA) controlled the outcome.

Parallel Agate Holdings Decision

·         Earlier that same week, in a separate stipulated decision, the IRS also conceded a different 2018 Louisiana conservation easement deduction — about $48 million claimed by Agate Holdings LLC.

·         In Agate, the IRS again lost all tax and penalties because the FPA notice was not timely under IRC Section 6235, amid allegations the Service had backdated extension documents to get around the statute.

·         Together, Olivian and Agate underscore that, even in aggressive syndicated easement cases with asserted fraud, strict adherence to the BBA statute of limitations for FPAs can be outcome‑determinative.

Practitioner takeaway

·         Treat 6235 like a hard stop. In BBA partnership exams, even in “bad facts” syndicated easement cases with strong fraud narratives, an untimely FPA is fatal to tax and penalties; Olivian and Agate show the court will not rescue the IRS from a blown 6235 deadline.

·         Build a statute dossier early: calendar the base 3‑year period, track every Form 872 / Form 8984 or equivalent extension, and document when any modification requests were made and when they were fully “submitted” (which drives the 270‑day rule under 6235(a)(2)).

·         Do not concede fraud‑exception arguments casually: force the IRS to prove that a valid fraud theory actually keeps the BBA assessment period open, rather than assuming fraud “automatically” rescues a late FPA.

·         In any easement BBA case, make statute of limitations and notice validity a first‑tier issue alongside valuation and 170 compliance; as Olivian and Agate illustrate, clean procedural wins can obviate having to litigate abusive‑scheme allegations.

 Have A Tax Problem?

     Contact the Tax Lawyers at

Marini & Associates, P.A. 

for a FREE Tax HELP Contact us at:
www.TaxAid.com or www.OVDPLaw.com
or Toll Free at 888 8TAXAID (888-882-9243)

Sources:

   1.       https://www.law360.com/tax-authority/federal/articles/2458796/-70m-easement-tax-break-sticks-after-irs-concedes-lateness           

2.      https://law.justia.com/codes/us/2015/title-26/subtitle-f/chapter-63/subchapter-c/sec.-6235/  

3.      https://www.law360.com/tax-authority/articles/2458796  

4.      https://www.thetaxadviser.com/issues/2025/oct/final-partnership-adjustment-not-issued-timely/   

5.       https://natlawreview.com/article/clock-beats-commissioner-irs-concedes-48m-easement-case  

6.      https://www.currentfederaltaxdevelopments.com/blog/2026/3/25/statute-of-limitations-backdated-extensions-and-the-fraud-exception-in-agate-holdings-llc-v-commissioner  

7.       https://www.linkedin.com/posts/polsinelli_a-major-conservation-easement-case-just-delivered-activity-7443311322068389888-beDF

8.      https://www.currentfederaltaxdevelopments.com/blog/2026/3/9/statute-of-limitations-and-notice-requirements-under-the-bba-centralized-partnership-audit-regime-an-analysis-of-mammoth-cave-property-llc-v-commissioner

9.      https://www.facebook.com/groups/1880812852184422/posts/2980562382209458/

10.   https://citysecretary2.dallascityhall.com/pdf/AA's/2022/05 - MAY 2022 REVISED.pdf

11.    https://readthereporter.com/DailyEdition/2021-12-13-Weekly.pdf

12.   http://weblink.arroyogrande.org/WebLink/DocView.aspx?id=304450&dbid=0&repo=ArroyoGrande

13.   https://www.law360.com/tax-authority/federal/articles/2415943/11th-circ-urged-to-restore-cut-to-17m-easement-deduction

14.   https://dekalbschoolsga.blob.core.windows.net/wpcontent/2023/11/ics-2024-min.pdf

15.    https://irvingtx.gov/index.php?section=boards-appointments-committee

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International Trust Planning for Global Families

International trust planning has become a central focus for advisors as globally connected families navigate an increasingly complex cross-border environment. Citizenship, residency, business interests, and beneficiaries often span multiple jurisdictions, each with its own tax, legal, and regulatory considerations. As a result, families and advisors must consider how both domestic and foreign trusts are structured not only to achieve planning objectives, but also to function reliably across borders over time.

At Marini & Associates, PA, based in Miami, Florida, we work with global families and their advisors to design trust solutions that can withstand changing laws, shifting residency, and evolving family dynamics across multiple countries.

Why Cross-Border Trust Issues Are Increasing

As global families’ personal, financial, and geographic ties become more interconnected, cross-border considerations now arise in even routine trust discussions. Common scenarios include:

·         Families with both U.S. and non-U.S. beneficiaries

·         Pre-immigration, expatriation, and mobility-driven planning

·         Offshore assets held alongside U.S. investment portfolios

·         Multigenerational families with members and business interests in multiple jurisdictions

These fact patterns drive demand for flexible trust solutions that can adapt as family members move, tax rules evolve, and reporting regimes expand.

Foreign Grantor Trusts: A Key International Tool

One structure frequently used in international planning is the Foreign Grantor Trust (FGT). For U.S. tax purposes, a trust’s classification as “foreign” depends on the IRS court test and control test; failure of either can cause the trust to be treated as a non‑U.S. entity for tax purposes. Through careful drafting, a South Dakota or Florida Foreign Grantor Trust can be established as a “foreign” trust for U.S. tax purposes, effectively mirroring offshore tax treatment while remaining a U.S. trust from a legal and administrative standpoint.

This distinction is especially important for:

·         Foreign-born individuals residing in the U.S.

·         Non‑U.S. persons holding U.S. assets or investing into the U.S.

·         Families addressing repatriation, reporting, privacy, or estate tax exposure

Because the trust is considered a U.S. trust for legal purposes, families can also access modern trust features, including long-term (dynasty) planning, strong asset protection statutes, and robust privacy laws available in top domestic jurisdictions. Long-term success, however, requires more than thoughtful drafting; maintaining intended FGT status depends on disciplined fiduciary processes, consistent administration, and a clear understanding of both U.S. tax rules and the governing trust law.

Integrating Domestic and Offshore Asset Protection

International families often feel forced to choose between domestic and offshore asset protection structures. In practice, many of the most resilient strategies deliberately incorporate elements of both. Leading U.S. jurisdictions with progressive trust statutes, such as South Dakota, offer stable trust governance, experienced fiduciary oversight, and industry-leading asset protection regimes that can be paired with offshore features when appropriate.

By integrating domestic and offshore protection concepts into a unified trust instrument, advisors can help families:

·         Retain U.S.-based administration, governance, and transparency

·         Access offshore-style protections only when circumstances warrant

·         Preserve flexibility as legal, tax, and enforcement environments change

For international families navigating heightened transparency, evolving reporting regimes, and cross-border enforcement, an integrated domestic–offshore strategy can help balance flexibility, control, and long-term reliability.

How Our Firm Can Help

Every global family’s profile is unique, and the “right” trust structure depends on goals, existing asset mix, jurisdictions involved, and family governance priorities. At Marini & Associates, PA, based in Miami, Florida, we regularly advise on:

·         International trust design and review

·         Use of Foreign Grantor Trusts and other cross-border structures

·         Coordination with foreign advisors on tax and reporting issues

·         Asset protection planning across domestic and offshore jurisdictions

We collaborate closely with clients’ existing legal, tax, and investment teams to implement structures that are not only technically sound today but also designed to remain workable over time.

If your family has ties to multiple countries or if you are considering holding U.S. and non‑U.S. assets in trust, we invite you to schedule a confidential consultation to discuss your options. 

Pre-Immigration Tax Planning Is Needed
To Avoid These US Tax Traps For The Unwary!

   Contact the Tax Lawyers at

Marini & Associates, P.A. 

for a FREE Tax HELP Contact us at:
www.TaxAid.com or www.OVDPLaw.com
or Toll Free at 888 8TAXAID (888-882-9243)

Sources:

1.       https://bridgefordadvisors.com/international-trust-planning-for-global-families/ 

2.      https://www.tridenttrust.com/knowledge/insights/advisors-guide-how-south-dakota-trusts-fit-into-international-estate-planning      

3.      https://bridgefordglobal.com/services/foreign-grantor-trust/  

4.      https://bridgefordtrust.com/south-dakota-foreign-grantor-trust/ 

5.       https://bridgefordtrust.com/services/foreign-grantor-trust/ 

6.      https://sdtrustco.com/why-south-dakota/asset-protection/ 

7.       https://bridgefordtrust.com/domestic-offshore-asset-protection/   

8.      https://www.stuartgreenlaw.com/the-south-dakota-trust-advantage

9.      https://macpas.com/asset-protection-trust-planning/

10.   https://bridgefordtrust.com

11.    https://www.cassonestatelaw.com/south-dakota-asset-protection-trusts

12.   https://wealthadvisorstrust.com/blog/foreign-grantor-trusts-south-dakota-trust-law/

13.   https://bridgefordglobal.com/bridgeford-trust-company/

14.   https://internationalfamilytrust.com/foreign-grantor-trust/

15.    https://internationalfamilytrust.com/why-south-dakota/unique-south-dakota-laws/

Why Pre US Immigration Tax Planning Is Essential for Global Families

Navigating U.S. Tax Exposure: Why Pre‑Immigration Planning Matters for Global Families

For globally mobile families, relocating to the United States can open extraordinary personal and economic opportunities — access to new markets, education, and expanded investment potential. Yet with those opportunities comes one of the most far‑reaching tax systems in the world.

Once you become a U.S. tax resident, your international assets, investments, and family wealth structures may suddenly fall under U.S. income tax, estate tax, and complex reporting regimes. Without advance planning, this transition can expose global wealth to unexpected tax issues and administrative burdens.

That’s why pre‑immigration tax planning is critical. By addressing tax, residency, and reporting requirements before entering the U.S. system, families can preserve wealth, reduce exposure, and remain compliant.

Understanding When U.S. Tax Residency Begins

U.S. tax residency can begin sooner than many newcomers expect. It’s generally established under either the Green Card Test or the Substantial Presence Test.

• Green Card Test: Once granted lawful permanent resident status, you’re typically considered a U.S. tax resident until that status is formally abandoned or revoked — letting the card expire doesn’t end it.
• Substantial Presence Test: Even without a green card, spending enough days in the U.S. over a three‑year period may trigger tax residency.

Because residency can arise inadvertently, individuals should carefully track travel days and immigration status before spending extended periods in the U.S.

Worldwide Income and Reporting Obligations

After U.S. tax residency begins, you’re generally taxed on worldwide income — from dividends, capital gains, real estate, or business activity anywhere on the planet.

In addition, U.S. residents face extensive foreign asset disclosure requirements, such as:

• FBAR (FinCEN Form 114): For foreign accounts totaling over $10,000.
• FATCA (Form 8938): For reportable foreign financial assets.
• Forms 5471, 8865, or 8858: For interests in foreign companies or partnerships.
• Form 3520 / 3520‑A: For transactions with foreign trusts or receipt of large foreign gifts.
• Form 8621: For passive foreign investment companies (PFICs).

Even when no U.S. tax is due, missing these filings can result in steep penalties.

Key Pre‑Immigration Planning Strategies

The most effective strategies take place before U.S. tax residency begins:

• Restructure Global Ownership: Review how real estate, businesses, and investments are held to reduce reporting burdens and manage exposure.
• Accelerate Income or Gains: Recognizing income or capital gains pre‑residency can reset asset basis and avoid U.S. tax on pre‑immigration appreciation.
• Review Foreign Funds: Many offshore funds classify as PFICs, which carry punitive tax effects. Adjust holdings before entering the U.S. system.
• Assess Foreign Trusts: Existing overseas trust structures may need modification to prevent unintended U.S. tax consequences once beneficiaries are U.S. residents.

Estate and Gift Tax Exposure

Tax residence also affects estate planning. While non‑U.S. domiciliaries are taxed only on U.S.‑situs assets, those domiciled in the U.S. for estate tax purposes face worldwide estate taxation.

Before residency, families should:

• Revisit ownership of global assets.
• Consider lifetime gifting strategies.
• Evaluate how future wealth transfers align with both U.S. and home‑country laws.

Coordinating Cross‑Border Advisors

Given the interaction between U.S. tax law and foreign jurisdictions, successful planning often requires a team approach — combining international tax counsel, immigration attorneys, estate planning professionals, and financial advisors in multiple countries.

A coordinated plan ensures compliance and efficiency across all relevant systems.

The Value of Early, Strategic Planning

Timing is everything. Once U.S. residency begins, restructuring decisions can trigger recognition events that planning could have avoided.

By acting early, global families can:

• Reduce long‑term income and transfer tax exposure.
• Simplify international compliance.
• Protect multi‑generational wealth.

Relocating to the United States involves far more than immigration paperwork. It’s also an opportunity to approach global wealth through the lens of U.S. taxation — strategically, proactively, and in harmony with your family’s long‑term goals.

Engaging experienced International Tax Counsel, like Marini & Associates PA before arrival can provide clarity, minimize risk, and support confident cross‑border success.

Thoughtful pre‑immigration planning can make all the difference when building a new life in the United States. Our international tax team advises global families, entrepreneurs, and executives on how to structure assets and minimize exposure before establishing U.S. residency.

Pre-Immigration Tax Planning Is Needed
To Avoid These US Tax Traps For The Unwary!

   Contact the Tax Lawyers at

Marini & Associates, P.A. 

for a FREE Tax HELP Contact us at:
www.TaxAid.com or www.OVDPLaw.com
or Toll Free at 888 8TAXAID (888-882-92