United States Court of Appeals
                            For the Eighth Circuit
                        ___________________________

                                No. 16-3277
                        ___________________________

                  RP Golf; SB Golf, LLC, Tax Matters Partner

                            lllllllllllllllllllllPetitioners

                                          v.

                       Commissioner of Internal Revenue

                           lllllllllllllllllllllRespondent
                                   ____________

                      Petition for Review of an Order of the
                       Commissioner of Internal Revenue
                                  ____________

                           Submitted: February 7, 2017
                              Filed: June 26, 2017
                                ____________

Before SMITH1, BENTON and SHEPHERD, Circuit Judges.
                           ____________

BENTON, Circuit Judge.

      RP Golf, LLC claimed a charitable deduction of $16.4 million on its 2003 tax
return for donating an easement to the Platte County Land Trust (PLT). The
Commissioner of Internal Revenue disallowed the deduction, finding RP Golf did not
make a “qualified contribution easement” under 26 U.S.C. § 170(b)(1)(E). After

      1
       The Honorable Lavenski R. Smith became Chief Judge of the United States
Court of Appeals for the Eighth Circuit on March 11, 2017.
trial, the tax court2 ruled for the Commissioner. RP Golf, LLC v. Comm’r, 

(2016). Having jurisdiction under 26 U.S.C. § 7482, this court
affirms.

                                          I.

       In 1997 and 1998, RP Golf acquired land in Platte County, Missouri. It
developed two private golf clubs, The National and The Deuce. To fund the
purchase, RP Golf obtained loans from two banks: Hillcrest and Great Southern.
Hillcrest financed the original purchase in 1997. Great Southern gave a development
loan in 2001. Both loans were secured by deeds of trust in property.

      In December 2003, RP Golf granted a permanent conservation easement to
PLT, a Missouri not-for-profit corporation. The easement’s purpose was to “further
the policies of the State of Missouri designed to foster the preservation of open space
and open areas, conservation of the state’s forest, soil, water, plant and wildlife
habitats, and other natural and scenic resources.”

       On April 14, 2004, Great Southern and Hillcrest signed subordinations of their
mortgages to PLT’s right to enforce the easement. Both subordinations state an
effective date of December 31, 2003. Also on April 14, RP Golf filed its 2003
partnership tax return claiming a $16.4 million tax deduction for the easement.

       The Commissioner disallowed RP Golf’s $16.4 million charitable deduction,
claiming it did not meet the requirements for a “qualified conservation contribution”
under 26 U.S.C. § 170(b)(1)(E). RP Golf challenged the Commissioner’s decision
in tax court. After trial, the tax court found RP Golf’s easement was “not protected
in perpetuity, and, therefore, was not a qualified conservation contribution.” RP Golf
appeals.

      2
          The Honorable Elizabeth C. Paris, United States Tax Court.

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                                          II.

       This court reviews decisions of the tax court “in the same manner and to the
same extent as decisions of the district courts in civil actions tried without a jury.”
Nelson v. Comm’r., 

, 664 (8th Cir. 2009). Factual findings are reviewed
for clear error, and legal determinations de novo. Scherbart v. Comm’r, 

, 989 (8th Cir. 2006).

      RP Golf sought the charitable tax deduction for a “qualified conservation
contribution.” 26 U.S.C. § 170(b)(1)(E). A “qualified conservation contribution” is
a contribution of 1) a real property interest, 2) to a qualified organization, 3)
exclusively for conservation purposes. 26 C.F.R. § 1.170A-14(a). Only the third
requirement is at issue here: whether the property was donated “exclusively for a
conservation purpose.” 

purpose must be “protected in perpetuity.” 26 U.S.C. §
170(h)(5)(A). “The Code does not define the phrase ‘protected in perpetuity,’ or
otherwise describe how a taxpayer may accomplish this statutory mandate.” Mitchell
v. Comm’r, 

, 1247 (10th Cir. 2015). The Commissioner’s regulations
elaborate on the protected-in-perpetuity requirement. See Comm’r v. Engle, 

, 226-27 (1984) (recognizing that 26 U.S.C. § 7805 authorizes the Commissioner
to prescribe all “needful rules and regulations” to enforce of the Code). 26 C.F.R. §
1.170A-14(g)(2) says:

      no deduction will be permitted under this section for an interest in
      property which is subject to a mortgage unless the mortgagee
      subordinates its rights in the property to the right of the qualified
      organization to enforce the conservation purposes of the gift in
      perpetuity.


                                         -3-
This regulation is binding unless “arbitrary and capricious in substance, or manifestly
contrary to the statute.” See Mayo Found. for Med. Educ. & Research v. United
States, 

, 53 (2011). If the regulation’s meaning is not plain, this court
“defers to the Commissioner’s reasonable interpretations, even those advanced in his
legal brief, unless ‘plainly erroneous or inconsistent with the regulation[],’ or there
is any other ‘reason to suspect that the interpretation does not reflect the agency’s fair
and considered judgment on the matter in question.’” See 

,
quoting Chase Bank USA, N.A. v. McCoy, 

, 209 (2011).

                                           III.

       RP Golf believes it met the “protected in perpetuity” requirement even if the
subordination occurred after the conveyance. However, both the Ninth and the Tenth
Circuits have held that § 1.170A-14(g)(2) requires a mortgage to be subordinated at
the time of the gift. Minnick v. Comm’r, 

, 1159 (9th Cir. 2015) (nearly
five-year gap between easement’s conveyance and subordination); 

(two-year gap). In both cases, the taxpayers argued—like RP Golf—that the
Code’s silence about the timing of subordination allows it after the conveyance of the
easement. According to those courts, the plain language of § 1.170A-14(g)(2) means
“subordination is a prerequisite to allowing a deduction.” 

,
quoting 

. Even if the regulation were ambiguous, this
court agrees with Mitchell that the Commissioner presents “a reasonable
interpretation of [§ 1.170A-14(g)(2)’s] mandate that no deduction will be permitted
for an interest in property that is subject to a mortgage unless the mortgage is
subordinated.” See 

(emphasis in original).

      RP Golf claims this is a technicality that posed no threat to the easement. It
invokes the next provision, § 1.170-14(g)(3):




                                           -4-
      A deduction shall not be disallowed . . . merely because the interest
      which passes to, or is vested in, the donee organization may be
      defeated by the performance of some act or the happening of some
      event, if on the date of the gift it appears that the possibility that such
      act or event will occur is so remote as to be negligible.

Mitchell rejected this argument: “[T]he remote future provision cannot reasonably
be read as modifying the strict mortgage subordination requirement.” 

. Instead, it held that the subordination requirement “is evidence that in
promulgating the rules, the Commissioner specifically considered the risk of
mortgage foreclosure to be neither remote nor negligible, and therefore chose to
target the accompanying risk of extinguishment of the conservation easement by
strictly requiring mortgage subordination.” 

See Comm’r v. Nat’l Alfalfa
Dehydrating & Milling Co., 

, 148 (1974) (“The propriety of a deduction
does not turn upon general equitable considerations . . . . Rather, it depends upon
upon legislative grace; and only as there is clear provision therefore can any
particular deduction be allowed.” (internal quotation omitted)).

       The regulations “do not permit a charitable contribution deduction unless any
existing mortgage on the donated property has been subordinated, irrespective of the
likelihood of foreclosure.” See 

. In order to take the
qualified conservation contribution deduction, Hillcrest and Great Southern must
have subordinated their mortgages to PLT’s interest before RP Golf conveyed the
easement in December 2003.

                                          IV.

      RP Golf argues it secured oral agreements with Hillcrest and Great Southern
to subordinate their mortgages before the conveyance to PLT. The tax court found
that RP Golf failed to prove the existence of the oral agreements:

                                          -5-
      [T]he evidence does not establish the oral consent agreements that RP
      Golf claims to have reached with Great Southern Bank and Hillcrest
      Bank regarding subordination of their interests in the easement
      property. The record contains no testimony or documentation from
      either of the banks that is dated on or before the date National Golf
      executed the PLT agreement to convey the easement to PLT and that
      corroborated RP Golf’s claim of an oral agreement to subordinate . . .
      . Even though RP Golf’s representative testified that he was “sure” he
      talked with Great Southern Bank and Hillcrest Bank about
      subordinating their interests to the easement before December 29,
      2003, he did not remember who he talked to at the banks.

RP Golf believes this is not a “finding of fact” because it is in the “Opinion” section
of the tax court’s decision. “The fact that the [tax] court intermingled some of its
findings of fact with its conclusions of law is of no significance. We look at a finding
or a conclusion in its true light, regardless of the label that the [tax] court may have
placed on it.” United States v. 1.377 Acres of Land, More or Less, Situated in City
of San Diego, 

, 1269-70 (9th Cir. 2003) (internal citation omitted).
Accord Walker v. Kelly, 

, 326 n.3 (4th Cir. 2010). See also 

(reviewing tax court decisions “in the same manner and to the same extent
as decisions of the district courts”).

       The tax court made a finding of fact about oral agreements. It found
insufficient testimony or documentation of the alleged oral agreements. It assessed
the credibility of RP Golf’s representative, noting that he “did not remember who he
talked to at the banks” despite his own testimony that he was “sure” he spoke with
bank representatives. Viewing the tax court’s finding in its “true light, regardless of
the label,” it made a finding of fact that “[t]he evidence does not establish the oral
consent agreements that RP Golf claims.” See 1.377 Acres of 

.

                                          -6-
      This finding was not clearly erroneous. “When the tax court’s fact finding is
based on a credibility determination, such finding is nearly unreviewable.” Blodgett
v. Comm’r, 

, 1035 (8th Cir. 2005), citing Anderson v. City of
Bessemer City, 

, 575 (1985) (stating a fact finder’s determination on
credibility can virtually never be considered clearly erroneous).

      Because the banks’ mortgages were not subordinated before the charitable
conveyance occurred in December 2003, RP Golf is not entitled to a deduction on its
2003 tax return for a qualified conservation contribution.

                                   *******

      The judgment of the tax court is affirmed.
                     ______________________________




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