United States Tax Court

T.C. Memo. 2023-92

DORCHESTER FARMS PROPERTY, LLC, DORCHESTER FARMS 

MANAGER, LLC, TAX MATTERS PARTNER,

Petitioner

v.

COMMISSIONER OF INTERNAL REVENUE,

Respondent

—————

Docket No. 6441-20. Filed July 24, 2023.

—————

Vivian D. Hoard and Meeren S. Amin, for petitioner.

Richard C. Mills III, Erin A. Schaffer-Williams, Peter T. McCary, John 

W. Sheffield III, John T. Arthur, and A. Gary Begun, for respondent.

MEMORANDUM OPINION

LAUBER, Judge: This case involves a charitable contribution deduction claimed for 2016 by Dorchester Farms Property, LLC (Dorchester), for the donation of a conservation easement. The Internal Revenue 

Service (IRS or respondent) issued a notice of final partnership administrative adjustment (FPAA) disallowing the deduction and determining 

penalties. Currently before the Court is respondent’s Motion for Partial 

Summary Judgment contending that the IRS complied with the requirements of section 6751(b)(1) by securing timely supervisory approval of 

all penalties at issue.1 We agree and will grant the Motion.

1 Unless otherwise indicated, statutory references are to the Internal Revenue 

Code, Title 26 U.S.C., in effect at all relevant times, and Rule references are to the Tax 

Court Rules of Practice and Procedure.

Served 07/24/23
2

[*2] Background

The following facts are derived from the pleadings, the parties’ 

Motion papers, and the Exhibits and Declarations attached thereto. 

They are stated solely for purposes of deciding respondent’s Motion and 

not as findings of fact in this case. See Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520 (1992), aff’d, 17 F.3d 965 (7th Cir. 1994).

Dorchester is a Georgia limited liability company (LLC) organized 

in April 2016. It is treated as a TEFRA partnership for Federal income 

tax purposes,2 and its tax matters partner is petitioner Dorchester 

Farms Manager, LLC, likewise a Georgia entity. Dorchester had its 

principal place of business in Georgia when the Petition was timely filed. 

Absent stipulation to the contrary, appeal of this case would lie to the 

U.S. Court of Appeals for the Eleventh Circuit. See § 7482(b)(1)(E).

In December 2016 Dorchester donated to the Southern Conservation Trust a conservation easement over a 625-acre tract in Liberty 

County, Georgia. Dorchester timely filed Form 1065, U.S. Return of 

Partnership Income, for its 2016 tax year. On that return it claimed a 

charitable contribution deduction of $18,663,918 for its donation of the 

easement.

The IRS selected Dorchester’s 2016 return for examination and 

assigned the case to Revenue Agent (RA) Leopoldo Garcia. In October 

2019, as the examination neared completion, RA Garcia recommended 

assertion against Dorchester of the 40% penalty for a gross valuation 

misstatement. See § 6662(h). In the alternative, he recommended assertion of a 20% penalty for a substantial valuation misstatement, a reportable transactions understatement, negligence, and/or a substantial 

understatement of income tax. See §§ 6662(b)(1)–(3), (c)–(e), 6662A(b).

RA Garcia’s recommendations to this effect were set forth in a 

civil penalty approval form, a copy of which is included with respondent’s Motion. RA Garcia is listed as the “Examiner” at the top of this

form. His group manager, Margaret McCarter, digitally signed the penalty approval form on October 3, 2019. She verified that she was RA 

Garcia’s “group manager” and that she “approve[d] the penalties identified” in that form.

2 Before its repeal, TEFRA (Tax Equity and Fiscal Responsibility Act of 1982), 

Pub. L. No. 97-248, §§ 401–407, 96 Stat. 324, 648–71, governed the tax treatment and 

audit process for many partnerships, including Dorchester.
3

[*3] On October 22, 2019, RA Garcia mailed petitioner a packet of documents, including a Letter 1807 and an attached Form 4605–A, Examination Changes, which set forth his proposed adjustments and penalty 

recommendations. This packet of documents constituted the first formal 

communication to petitioner that the IRS intended to assert the penalties discussed above, as recommended by RA Garcia and approved by 

Ms. McCarter. More than four months later, on March 12, 2020, the IRS 

issued petitioner an FPAA, including a Form 866–A, Explanation of 

Items, disallowing the $18,663,918 deduction Dorchester claimed for the 

conservation easement and determining the aforementioned penalties. 

Petitioner timely petitioned this Court for readjustment of partnership 

items.

Discussion

I. Summary Judgment Standard

The purpose of summary judgment is to expedite litigation and 

avoid costly, unnecessary, and time-consuming trials. See FPL Grp., 

Inc. & Subs. v. Commissioner, 116 T.C. 73, 74 (2001). We may grant 

partial summary judgment regarding an issue as to which there is no 

genuine dispute as to any material fact and a decision may be rendered 

as a matter of law. See Rule 121(a)(2); Sundstrand Corp., 98 T.C. at 520. 

In deciding whether to grant summary judgment, we construe factual 

materials and inferences drawn from them in the light most favorable 

to the nonmoving party. Sundstrand Corp., 98 T.C. at 520. Where the 

moving party makes and properly supports a motion for summary judgment, “the nonmovant may not rest on the allegations or denials in that 

party’s pleading” but must set forth specific facts, by affidavit or otherwise, showing that there is a genuine dispute for trial. Rule 121(d).

II. Analysis

Section 6751(b)(1) provides that “[n]o penalty under this title 

shall be assessed unless the initial determination of such assessment is 

personally approved (in writing) by the immediate supervisor of the individual making such determination.”3 In Kroner v. Commissioner, 48 

F.4th 1272, 1276 (11th Cir. 2022), rev’g in part T.C. Memo. 2020-73, the 

Eleventh Circuit held that “the IRS satisfies [s]ection 6751(b) so long as 

3 Although the Commissioner does not bear a burden of production with respect 

to penalties in a partnership-level proceeding, a partnership may raise section 6751(b) 

as an affirmative defense. See Dynamo Holdings Ltd. P’ship v. Commissioner, 150 T.C. 

224, 236–37 (2018).
4

[*4] a supervisor approves an initial determination of a penalty assessment before [the IRS] assesses those penalties.” The court interpreted 

the phrase “initial determination of [the] assessment” to refer to the 

“ministerial” process by which the IRS formally records the tax debt. 

See id. at 1278. Absent stipulation to the contrary, this case is appealable to the Eleventh Circuit, and we thus follow its precedent. See Golsen v. Commissioner, 54 T.C. 742, 756–57 (1970), aff’d, 445 F.2d 985 

(10th Cir. 1971).

Under a literal application of the standard enunciated in Kroner, 

supervisory approval could seemingly be secured at any moment before 

actual assessment of the tax. But the Eleventh Circuit left open the 

possibility that supervisory approval in some cases might need to be secured sooner, i.e., before the supervisor “has lost the discretion to disapprove” the penalty determination. See Kroner v. Commissioner, 48 F.4th

at 1279 n.1; cf. Laidlaw’s Harley Davidson Sales, Inc. v. Commissioner, 

29 F.4th 1066, 1074 (9th Cir. 2022) (treating supervisory approval as 

timely if secured before the penalty is assessed or “before the relevant 

supervisor loses discretion whether to approve the penalty assessment”),

rev’g and remanding 154 T.C. 68 (2020); Chai v. Commissioner, 851 F.3d 

190, 220 (2d Cir. 2017) (concluding that supervisory approval must be 

obtained at a time when “the supervisor has the discretion to give or 

withhold it”), aff’g in part, rev’g in part T.C. Memo. 2015-42.

Respondent has supplied a copy of the civil penalty approval form

that lists all of the penalties at issue. RA Garcia was the examiner who 

recommended assertion of these penalties. His name appears as the 

“Examiner” at the top of the form, and his case activity record—a redacted version of which is included with respondent’s Motion—shows 

that he was the lead “examiner” for the Dorchester examination.4

Ms. McCarter digitally signed the penalty approval form as RA 

Garcia’s “group manager” in the box captioned “Name and Title of Approver.” We accordingly conclude that she was RA Garcia’s “immediate 

supervisor” within the meaning of section 6751(b)(1). See Sand Inv. Co. 

4 RA Garcia’s case activity record, attached as Exhibit C to the Declaration 

accompanying respondent’s Motion, redacts seven lines of the document on pages 1 

and 2, all relating to entries made before March 1, 2019. Petitioner complains that it 

has “no way of knowing what information is redacted.” But the Declaration, which 

was filed under penalties of perjury, avers that the information thus redacted was protected by the attorney-client privilege or was taxpayer privacy information protected 

from disclosure by section 6103. We find that these redactions were properly made in 

accordance with Rule 27, and they do not affect our disposition of the issue at hand.
5

[*5] v. Commissioner, 157 T.C. 136, 142 (2021); see also Salacoa Stone 

Quarry, LLC v. Commissioner, T.C. Memo. 2023-68, at *6 (holding that 

Ms. McCarter’s signature as “team manager” on a penalty approval form 

satisfied the statutory requirements); Sparta Pink Prop., LLC v. Commissioner, T.C. Memo. 2022-88, 124 T.C.M. (CCH) 121, 124 (holding that 

Ms. McCarter’s signature as “group manager” on a penalty approval 

form satisfied the statutory requirements).

All of the penalties at issue were approved by Ms. McCarter on 

October 3, 2019. The Letter 1807 and the Form 4605–A were mailed to 

petitioner on October 22, 2019, and the FPAA was issued on March 12, 

2020. As of October 3, 2019, therefore, the IRS examination remained 

at a stage where Ms. McCarter had discretion to approve or disapprove 

the penalty recommendations. See Kroner v. Commissioner, 48 F.4th 

at 1279 n.1. Therefore, under a reading of Kroner most favorable to petitioner, the IRS complied with the requirements of section 6751(b)(1).

Petitioner advances essentially three arguments in support of a 

contrary conclusion. First, while not disputing that RA Garcia prepared 

the civil penalty approval form, petitioner surmises that RA Garcia recommended the “categorical assertion of penalties based on the type of 

transaction” rather than undertaking “a substantive determination” 

that penalties were appropriate in this particular case. Noting that RA 

Garcia’s case activity record does not specifically mention “determining 

penalties,” petitioner infers that he did not devote significant time or 

effort to this task.

We have repeatedly rejected this line of argument. Faced with 

assertions that IRS officers gave insufficient consideration to the matters before them, we have ruled such lines of inquiry “immaterial and 

wholly irrelevant to ascertaining whether respondent complied with the 

written supervisory approval requirement.” Patel v. Commissioner, T.C. 

Memo. 2020-133, 120 T.C.M. (CCH) 211, 214 (quoting Raifman v. Commissioner, T.C. Memo. 2018-101, 116 T.C.M. (CCH) 13, 27–28); see Estate of Morrissette v. Commissioner, T.C. Memo. 2021-60, 121 T.C.M. 

(CCH) 1447, 1474. Section 6751(b)(1) does not inquire into the time or 

effort the examiner and the supervisor devote to their respective tasks. 

Rather, as we have said before: “The written supervisory approval requirement . . . requires just that: written supervisory approval.” Pickens 

Decorative Stone, LLC v. Commissioner, T.C. Memo. 2022-22, 123 

T.C.M. (CCH) 1127, 1130 (quoting Raifman, 116 T.C.M. (CCH) at 28).
6

[*6] Second, while not disputing that RA Garcia was the “examiner” 

for the Dorchester audit, petitioner questions whether RA Garcia made 

the “initial determination” to assert the penalties in question. Petitioner 

speculates that it was not RA Garcia, but “the IRS Office of Chief Counsel or [someone] at another level of [r]espondent” who made that decision. Petitioner notes that, on October 7, 2019, RA Garcia recorded in 

his activity record his receipt of a “[Form] 866–A draft” from IRS chief 

counsel. This occurred four days after Ms. McCarter had signed the penalty approval form. Surmising that RA Garcia may have had previous 

consultations with other IRS officers before recommending the penalties 

that he set forth on the penalty approval form, petitioner has issued informal discovery seeking “any communications or guidance provided to 

[RA] Garcia or Ms. McCarter regarding the imposition of penalties.”

We have previously rejected the argument that penalties in fact

recommended by an examining agent were in substance determined by 

someone else, e.g., by higher level IRS officials or by an in-house IRS 

appraiser. See Cattail Holdings, LLC v. Commissioner, T.C. Memo. 

2023-17, at *9–11. The “initial determination of [a penalty] assessment” 

is a formal action directed to a particular taxpayer by the Examination 

Division. See Frost v. Commissioner, 154 T.C. 23, 32 (2020); Belair 

Woods, LLC v. Commissioner, 154 T.C. 1, 15 (2020). The word “determination” has “an established meaning in the tax context” and denotes 

an action “with a high degree of concreteness and formality.” Nassau

River Stone, LLC v. Commissioner, T.C. Memo. 2023-36, at *6 (quoting 

Belair Woods, 154 T.C. at 15). It is the duty of the examining agent to 

determine penalties, taking into account (among other things) the value 

of the property contributed and possible defenses the taxpayer may 

have. See Cattail Holdings, T.C. Memo. 2023-17, at *11.

Petitioner’s speculation that RA Garcia, the lead examiner for the 

Dorchester audit, did not make the “initial determination” to assert the 

penalties against Dorchester is not enough to establish a genuine dispute of material fact. See Rule 121(d). We accept arguendo petitioner’s 

premise that RA Garcia may have consulted with other IRS officers in 

connection with the recommendations he set forth on the penalty approval form. But an “initial determination” signifies a “consequential 

moment” of IRS action. Belair Woods, 154 T.C. at 15 (quoting Chai v. 

Commissioner, 851 F.3d at 221). Preliminary discussion among IRS officials as to whether a penalty is appropriate does not constitute the “initial determination of [a penalty] assessment” within the meaning of section 6751(b)(1). See Nassau River Stone, T.C. Memo. 2023-36, at *6–7 

(citing Belair Woods, 154 T.C. at 9). The penalty approval form 
7

[*7] establishes that RA Garcia made the “initial determination” to assert the penalties set forth on that form.

Finally, petitioner contends that “[r]espondent did not make any 

effort to authenticate” the documents discussed above, including the 

civil penalty approval form and the redacted copy of RA Garcia’s case 

activity record. In petitioner’s view, “these documents are not sufficient 

to warrant summary judgment as a matter of law.”

This line of argument is equally unpersuasive. We have regularly 

decided section 6751(b)(1) questions on summary judgment on the basis 

of IRS forms and records, confirmed by declarations supplied by IRS officers. See, e.g., Sand Inv., 157 T.C. at 142; Long Branch Land, LLC v. 

Commissioner, T.C. Memo. 2022-2; Excelsior Aggregates, LLC v. Commissioner, T.C. Memo. 2021-125. Respondent has supplied documentary evidence confirming that RA Garcia was the examiner for the Dorchester audit and that Ms. McCarter approved his penalty recommendation in her capacity as his “group manager.” Respondent has submitted a declaration under the penalties of perjury averring that all these 

documents are “true and correct copies” from the IRS administrative 

file. We have repeatedly held that a group manager’s signature on a 

civil penalty approval form, without more, is sufficient to satisfy the 

statutory requirements. Salacoa Stone Quarry, T.C. Memo. 2023-68,

at *6; Sparta Pink Prop., 124 T.C.M. (CCH) at 124 (citing Belair Woods, 

154 T.C. at 17). The record establishes that these requirements were

met here.

We are mindful that “summary judgment should not be granted 

until the party opposing the motion has had an adequate opportunity 

for discovery.” Snook v. Tr. Co. of Ga. Bank of Savannah, N.A., 859 F.2d 

865, 870 (11th Cir. 1988); see also Anderson v. Liberty Lobby, Inc., 477 

U.S. 242, 257 (1986) (noting that the nonmoving party must have had 

“a full opportunity to conduct discovery”). But discovery must be relevant to “the subject matter involved in the pending case.” Rule 70(b)(1);

see Hickman v. Taylor, 329 U.S. 495, 507–08 (1947); Caney v. Commissioner, T.C. Memo. 2010-90, 99 T.C.M. (CCH) 1366, 1368.

The discovery petitioner seeks is irrelevant to resolution of the 

question presented by respondent’s Motion. See Salacoa Stone Quarry, 

T.C. Memo. 2023-68, at *5–6; Caney, 99 T.C.M. (CCH) at 1368 (considering whether “further discovery would likely yield any fact essential to 

[the nonmoving party’s] opposition to the motion”). The record includes 

documents demonstrating written supervisory approval of the 
8

[*8] examining agent’s initial determination to assert the penalties in 

question. By propounding discovery seeking communications among RA 

Garcia, Ms. McCarter, and other IRS officials, petitioner seeks improperly to look behind the information and signature appearing on the face 

of the form. See Sparta Pink Prop., 124 T.C.M. (CCH) at 124; Patel, 120 

T.C.M. (CCH) at 214; Raifman, 116 T.C.M. (CCH) at 28.

To reflect the foregoing,

An order will be issued granting respondent’s Motion for Partial 

Summary Judgment.