Do Mixed Questions of Fact and Law Have Component Facts and Law for § 7491(a) Purposes? (9/11/25)

I address today what may seem to be a fairly mundane issue, but in some contexts might be important. Readers may already be familiar with § 7491(a), here, titled “Burden shifts where taxpayer produces credible evidence.” The “burden” referred to is the burden of proof and specifically the burden of persuasion. The burden of persuasion is not technically relevant until the end of trial when it determines which party loses in the event the trier of fact is in factual equipoise as to some key fact. From a practical perspective, it is important to keep in mind the conventional trial wisdom that triers of fact are rarely in equipoise, so that ultimately the assignment of the burden of persuasion is meaningless in most cases. Setting that aside and accepting the possibility that the burden of persuasion may be outcome-determinative in some cases, parties will often want to know before the beginning of trial which party has the burden of persuasion so that it can prove its case accordingly.

That is what happened in FBA St. Clair Property C, LLC v. Commissioner (T.C. Case 14406-23, here, at docket # 176 9/11/25), where the petitioner in a syndicated conservation easement case filed a motion in limine for the Court to hold that the conditions in § 7491(a) assigned the burden of persuasion to the IRS. The Court denied the motion, reasoning (Slip Op. 3-4):

          Section 7491(a) states that if a taxpayer produces credible evidence with respect to one or more factual issues relevant to the taxpayer’s tax liability, the burden of proof may shift to the Commissioner as to that issue or issues, as long as the taxpayer complies with certain additional requirements. Section 7491(a) only applies if the issue is factual and not “a mixed question of fact and law” which is “primarily a legal question.” Williams v. Commissioner, 120 F.App’x 289, 293 (10th Cir. 2005) (denying that § 7491(a) applies to the issue of whether a payment was a gift for purposes of § 102(a) or instead a bonus), aff’g T.C. Memo. 2003-97. Here, the issue is whether the transaction was a contribution or gift for purposes of Section 170(c), and we hold that this issue is a mixed question of fact and law, and so Section 7491(a) does not shift the burden to the Commissioner. 

I wonder, though, whether the Court painted with too broad a brush in the final sentence. To be sure, “the issue of whether the transaction was a contribution or gift for purposes of Section 170(c)” is a mixed question of fact and law. But, at least in other contexts, such mixed questions have fact and law components that can be analyzed separately. For example, in another syndicated conservation easement case where valuation was a mixed question of fact and law, the Court said: “A determination of fair market value is a mixed question of fact and law: the factual premises are subject to a clearly erroneous standard while the legal conclusions are subject to de novo review.” TOT Property Holdings, LLC v. Commissioner, 1 F.4th 1354, 1369 (11th Cir. 2021), here (a syndicated conservation easement case quoting Palmer Ranch Holdings Ltd v. Commissioner, 812 F.3d 982, 994 (11th Cir. 2016), which in turn was quoting Est. of Jelke v. Commissioner, 507 F.3d 1317, 1321 (11th Cir. 2007)). Similarly, in a recent nonprecedential opinion from the Eleventh Circuit, Buckelew Farm, LLC v. Commissioner (11th Cir. 9/2/25), CA11 here and GS here, also a conservation easement case, the Court said (Slip Op. 12, cleaned up with quotation marks and citations omitted): “As relevant here, a determination of fair market value is a mixed question of fact and law: the factual premises are subject to a clearly erroneous standard while the legal conclusions are subject to de novo review. In other words, the mathematical computation of fair market value is an issue of fact but the appropriate valuation method is an issue of law we review de novo.”

To be fair to the FBA St. Clair Property C Court, though, I am not sure that the parties made this fine a distinction. More importantly, depending upon what happens at trial of the case and the parties’ post-trial briefs based on the evidence at trial, the Court can always revisit the issue of which party has the burden of persuasion and thus loses if the Court is in equipoise as to any fact component of the mixed question of fact and law.