Opinion ID: 2826695
Heading Depth: 3
Heading Rank: 2

Heading: Trial and the Tax Court’s Order

Text: Following trial but before the Tax Court had ruled in Taxpayers’ case, the Tax Court decided Mitchell v. Commissioner (Mitchell I), which held that mortgages must be subordinated at the time of the donation in order to be deductible under Treas. Reg. § 1.170A-14(g)(2). 138 T.C. No. 16 (T.C. 2012), vacated on denial of reconsideration by Mitchell v. Comm’r, 106 T.C.M. (CCH) 215 (T.C. 2013). In December 2012, the Tax Court ruled for the Commissioner, citing Mitchell I. The Tax Court concluded that, under Mitchell I, a mortgage must be subordinated at the time of the gift in order to be in compliance with the “in perpetuity” requirement of 26 U.S.C. § 170 and the more specific subordination requirements of Treasury Regulation § 1.170A-14(g)(2). Taxpayers moved for reconsideration, which the Tax Court denied. Taxpayers timely filed a notice of appeal with this court. While this appeal was pending, the Tenth Circuit affirmed the Tax Court in Mitchell I, agreeing with the Tax Court’s reasoning. See Mitchell v. Comm’r (Mitchell II), 775 F.3d 1243 (10th Cir. 2015).