Introduction
Many commentators have offered thoughts on a recent tax trial – the first of its kind in the syndicated conservation easement transaction (SCET) context – where the IRS and DOJ-Tax proceeded with criminal prosecution ahead of civil audit remedies. The prosecution alleged a scheme to defraud the government through inflated appraisals.
In the criminal prosecution, the government did not present an expert opinion of value. Instead, the government attacked the taxpayer appraisal methodology, effectively arguing it is improper to rely on appraisals prepared using the income approach (a/k/a the “subdivision method”), which utilizes discounted cash flow (DCF) analysis to arrive at a value of raw, undeveloped land at a hypothetical highest and best use (HBU), frequently a residential subdivision.
This article is not about the criminal prosecution, though its author represented the lead defendant at trial.[1] Rather, this article explores opinions from courts explaining how raw, undeveloped land donated for a qualifying conservation purpose may be valued using the subdivision method when HBU is established to be a residential subdivision.[2]
It is about the legal fiction that might have allowed the owners of Bushwood Country Club[3] to donate the real property on which it sits to a qualifying conservation purpose and claim a tax deduction at its hypothetical HBU (that is, as if Rodney Dangerfield’s character had already built the Czervik Condominiums). Fans of the film recall Judge Smails’s intolerable reaction to the mere suggestion of such an idea, which fuels his animosity and precipitates a golf grudge match for the ages.
HBU in Taking Clause Cases
How to value raw, undeveloped land at its HBU first came up in Takings Clause cases. See, e.g., Good v. United States, 39 Fed. Cl. 81, 104 (1997), aff’d, 189 F.3d 1355 (Fed. Cir. 1999) (“Fair market value is usually determined by reference to ‘highest and best use’ of the property, which may be either the current use of the property at the time of the taking, or a use other than the existing use if the property is clearly adaptable to that use.”). In Good, the United States Court of Federal Claims pointed to “the Olson Rule” (named after the SCOTUS decision from whence it derives) as the standard establishing when potential uses of property other than current use should be considered in arriving at fair market value. Id. (citing Olson v. United States, 292 U.S. 246, 256-257 (1934) (establishing rule that an HBU cannot “depend upon events or combinations of occurrences which, while within the realm of possibility, are not fairly shown to be reasonably probable”).
The Olson Rule was further developed by the U.S. Court of Appeals for the Federal Circuit:
This rule[] means that the court must not, itself, speculate, i.e., guess, about potential end uses or markets when the speculation is so remote or improbable that one would not invest his money in it. It does not exclude consideration of a relevant market made up of investors who are real but are speculating in whole or major part. Anyone who buys mineral property is speculating to a large extent, and so is even to some extent one who buys “blue chip” securities.
Fla. Rock Indus., Inc. v. United States, 791 F.2d 893, 903 (Fed. Cir. 1986) (citations omitted). Ultimately, the Court concluded that no Fifth Amendment “taking” occurred in Florida Rock, but we are left with a framework that will be utilized by courts going forward.
At bottom, Good and Florida Rock reiterate that the most reliable method to arrive at fair market value for real property, particularly unimproved property, is the sales comparison approach. However, the cases recognize that under certain circumstances, including where there are limited sales for comparison, the appraiser may utilize the so-called “subdivision method” in order to arrive at fair market value.” See, e.g., Good, 39 Fed. Cl. at 106 (citing The Appraisal Institute, Dictionary of Real Estate Appraisal 354 (3d ed. 1993)).
In 2006, the Federal Court of Claims had another opportunity to analyze HBU in the Takings Clause context. It again pointed to Olson and explained that HBU is “[t]he reasonably probable and legal use of [property], which is physically possible, appropriately supported, financially feasible, and that results in the highest value, including those uses to which the property may be readily converted.” Brace v. United States, 72 Fed. Cl. 337, 350 (2006), aff’d, 250 F. App’x 359 (Fed. Cir. 2007) (citations and punctuation omitted). The Court went a little further, explaining that “the loss to be compensated for under the Takings Clause is not purely hypothetical, but must bear some grounding in reality, even in the case of a projected future use.” Id.
That is, in the “Takings Clause” context, the HBU cannot be a complete legal and practical fiction – though it certainly may be hypothetical and speculative, particularly where there are no comparable sales.[4]
HBU in Conservation Easement Cases
As more and more taxpayers began claiming the charitable donation deduction in the context of conservation easement transactions, these same authorities became the subject of civil tax filings and controversies. Naturally, cautious practitioners looked to the Tax Courts for guidance.
In 2009, the U.S. Tax Court decided Kiva Dunes, a landmark case that was widely discussed and relied upon by participants in the conservation easement space for years to come. Kiva Dunes Conservation, LLC v. Comm’r, 97 T.C.M. (CCH) 1818 (T.C. 2009). Eleven (11) years later, Peter J. Reilly would criticize the reliance by industry participants on Kiva Dunes.[5]
For context, when the Peter J. Reilly article came out on or around September 3, 2020, SCETs were under widespread scrutiny as potential vehicles for fraud and abuse.[6] Thus, it was somewhat easy to criticize SCET participants with the benefit of hindsight and the momentum of an impending crusade against SCETs.
Mr. Reilly was absolutely correct about several points in his article.[7] Among them, industry participants relied upon Kiva Dunes for the proposition that HBU could be calculated appropriately based on a hypothetical use (e.g., a residential subdivision) even though that was not the actual or intended use for the property under the income approach to valuation.[8] So, what did Kiva Dunes actually say?
Relying on The Olson Rule and other authorities, the Tax Court in Kiva Dunes explicitly held for the taxpayer:
In deciding the fair market value of property, we must take into account not only the current use of the property but also its highest and best use. See Stanley Works & Subs. v. Comm’r, 87 T.C. 389, 400, 1986 WL 22172 (1986); sec. 1.170A–14(h)(3)(i) and (ii), Income Tax Regs. A property’s highest and best use is the highest and most profitable use for which it is adaptable and needed or likely to be needed in the reasonably near future. Olson, 292 U.S. at 255. The highest and best use can be any realistic, objective potential use of the property. Symington v. Comm’r, 87 T.C. 892, 896, 1986 WL 22044 (1986).
97 T.C.M. (CCH) 1818 at *2 (internal citations altered). Notably, “[e]ach of the experts concluded that the highest and best use of Kiva Dunes Golf Course at the time of the contribution of the easement would have been for the development of a residential subdivision.” Id. at *4. From there, the only question was valuation before and after placement of the easement. Both experts (i.e., the taxpayer expert and the IRS expert) used the subdivision method to calculate the before value.[9] Id. (explaining the discounted cash flow analysis utilized by the taxpayer and IRS experts).
The opinion is lengthy and nuanced, even for a tax lawyer, but at the end of the day the Tax Court agreed with the taxpayer’s expert, Mr. Clark, and found that the before value was $31,938,985. Id. at *10, n. 38. This meant the fair market value of the conservation easement for purposes of charitable contribution deduction was $28,656,004, and the taxpayer was not subject to any penalties. Id. at *10.
Notably, the taxpayer had purchased the property for a fraction of this price (albeit ~10 years prior to taking the deduction), and that purchase price was taken into account for purposes of the after value, but it was not considered as part of the DCF analysis for the before value under the subdivision method. Id. at *4-10. Moreover, the Court allowed the appraisers to use different appraisal methodologies for the before (subdivision method) and after (comparable sales) values over the government’s objection. Id. at *7-9. In other words, none of this was improper.
After Kiva Dunes came Trout Ranch, LLC v. Commissioner, 100 T.C.M. (CCH) 581 at *8 (T.C. 2010), aff’d, 493 F. App’x 944 (10th Cir. 2012) (applying the “so-called subdivision method” “to find the present value of the hypothetical residential subdivisions” in a conservation easement case). In Trout Ranch, the Tax Court reduced the taxpayer claimed value, but it used the subdivision method to arrive at value, and the Tax Court was affirmed by the 10th Circuit Court of Appeals in an unreported opinion. 493 F. App’x at 946, n.*
The 2012 Tax Court decision in Cohan v. Commissioner is also noteworthy. 103 T.C.M. (CCH) 1037 (T.C. 2012). Under the header “Fair Market Value Standard,” the Tax Court provides an “Overview,” as follows:
For Federal income tax purposes the relevant valuation standard is “fair market value”, and that term denotes “the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of relevant facts.” Sec. 1.170A–1(c)(2), Income Tax Regs.; see Rolfs v. Comm’r, 135 T.C. 471, 489, 2010 WL 4366561 (2010); Browning v. Comm’r, 109 T.C. 303, 314, 1997 WL 732484 (1997); cf. United States v. Cartwright, 411 U.S. 546, 551, 93 S.Ct. 1713, 36 L.Ed.2d 528 (1973). We decide the fair market value of the disputed property interests as of the date of the 2001 transaction, on the basis of a hypothetical willing buyer and a hypothetical willing seller. See Doherty v. Comm’r, 16 F.3d 338, 340 (9th Cir.1994), aff’g. T.C. Memo.1992–98; Boltar, LLC v. Comm’r, 136 T.C. 326, 336, 2011 WL 1314445 (2011); Rolfs v. Comm’r, supra at 480–481; Arbor Towers Assocs., Ltd. v. Comm’r, T.C. Memo.1999–213; sec. 1.170A–1(c)(1), Income Tax Regs; see also Estate of Bright v. United States, 658 F.2d 999, 1005–1006 (5th Cir.1981). The characteristics of these hypothetical persons are not necessarily the same as the personal characteristics of the parties to the 2001 transaction, and we take the views of both hypothetical persons into account. See Estate of Bright v. United States, supra at 1005–1006; Estate of Newhouse v. Comm’r, 94 T.C. 193, 218, 1990 WL 17251 (1990); Estate of Scanlan v. Comm’r, T.C. Memo.1996–331, affd. without published opinion 116 F.3d 1476 (5th Cir.1997). The fair market value of property reflects its highest and best use as of the date of its valuation, and no knowledge of future events affecting its value, the occurrence of which was not reasonably foreseeable on the valuation date, is given to the hypothetical persons. Estate of Newhouse v. Comm’r, supra at 218; cf. sec. 20.2031–1(b), Estate Tax Regs. The fair market value of property is not affected by whether an owner has actually put the property to its highest and best use. The reasonable and objective possibilities for the highest and best use of property control its value. See United States v. Meadow Brook Club, 259 F.2d 41, 45 (2d Cir.1958); Stanley Works & Subs. v. Comm’r, 87 T.C. 389, 400, 1986 WL 22172 (1986).
Cohan, 103 T.C.M. (CCH) 1037 at *20-21 (internal citations altered). After giving this overview, the Tax Court went on to explain that “the income approach” is one of at least three approaches the Court usually considers when determining fair market value. Id. at *20. The rest of the opinion was largely irrelevant for present purposes, but again, the Tax Court had condoned the income approach to valuation in the context of a hypothetical residential subdivision.
A 2014 Tax Court decision bolstered the idea that HBU “must take into account not only the current use of the property but also an objective assessment of how immediate or remote the likelihood is that the property, absent the restriction, would in fact be developed, as well as any effect from zoning, conservation, or historic preservation laws that already restrict the property’s potential [HBU].” Schmidt v. Comm’r, 108 T.C.M. (CCH) 135 at *9 (T.C. 2014). To be clear, this is a requirement under the regs. See sec. 1.170A–14(h)(3)(ii), Income Tax Regs.
The Schmidt opinion also stands for the important proposition that “[b]ecause a market for the purchase and sale of conservation easements rarely exists, a conservation easement’s value is ordinarily determined by measuring the diminution in value of the affected property resulting from the creation of the easement (before and after method).” Id. (emphasis added) (citing Symington, 87 T.C. 892, 895; sec. 1. 170A14(h)(3)(i) and (ii), Income Tax Regs.) In other words, the Tax Court explicitly contemplated that the market method (a/k/a the “comparable sales method”) generally does not work for valuing conservation easements, and this comes straight from the regs too. Section 1.170A14(h)(3)(i), Income Tax Regs.
From there, the Tax Court goes through a very fact-specific discounted cashflow analysis en route to its conclusions that although the taxpayers overstated the deduction and underpaid taxes, the taxpayers had reasonable cause for the underpayment and acted in good faith. Id. at *23-25. Therefore, the taxpayers were not liable for substantial valuation misstatement or underpayment penalties. Id.
On November 19, 2020, the Tax Court once again revisited the judicial history surrounding the available methods to determine the before and after value. Rajagopalan v. Comm’r 120 T.C.M. (CCH) 355 at *5-6 (T.C. 2020). The opinion is somewhat unhelpful inasmuch as the Court omitted any fair market value calculation because it was so obvious the taxpayers had understated the value of the conservation easements on their returns. Id. at *11.
In reaching this conclusion, the Tax Court cited several “oldie-but-goodies,” including Kiva Dunes, and explained again that “[t]he income approach projects the future cashflows the property will generate at its [HBU]…This method assumes that an investor would pay no more than the present value of the property’s anticipated future income.” Id. at *5 (emphasis in original) (citing Trout Ranch, T.C. Memo. 2010-283, 2010 WL 5395108, at *4, aff’d, 493 F. App’x 944 (10th Cir. 2012); Butler v. Comm’r, T.C. Memo. 2012-72, 2012 WL 913695, at *16 (T.C. 2012)).
For context, the Rajagopalan opinion was entered approximately two (2) months after the Forbes article came out. And after Rajagopalan, nothing really changes until Champions Retreat, another case involving Mr. Clark, the taxpayer valuation expert from Kiva Dunes, and a challenge by the IRS to his use of the subdivision method to valuation. Champions Retreat Golf Founders, LLC v. Comm’r, 124 T.C.M. (CCH) 267 at *16 (T.C. 2022).
In Champions Retreat, the Tax Court squarely rejected the IRS position that use of the subdivision method was improper, explaining:
The comparable sales method is preferred generally, depending on the situation. See Estate of Spruill, 88 T.C. at 1229 n.24 (“In the case of vacant, unimproved property … the comparable sales approach is ‘generally the most reliable method of valuation….’” (quoting Estate of Rabe v. Comm’r, T.C. Memo. 1975-26, aff’d, 556 F.2d 1183 (9th Cir. 1977) (unpublished table decision))). But we have recognized that the subdivision development method also is an appropriate method. See, e.g., Crimi, T.C. Memo. 2013-51, at *64–65; Glick v. Comm’r, 1997 WL 42357, at *5.
Id. at *17 (internal citations altered). The Tax Court ultimately concluded that Mr. Clark’s valuation ($10,427,435) was higher than the fair market value ($7,834,091) but found no problem with Mr. Clark’s methodology. Id. at *4, 23-24. In fact, the Tax Court again painstakingly explained the methodology:
The income method values a property by discounting expected cashflow from the property. See, e.g., Marine v. Comm’r, 92 T.C. 958, 983 (1989), aff’d without published opinion, 921 F.2d 280 (9th Cir. 1991). Property value is determined under this method by adding the sum of the present values of the expected cashflows from the property to the present value of the residual value of the property. See Chapman Glen Ltd., 140 T.C. at 327; see also Crimi v. Comm’r, T.C. Memo. 2013-51, at *64. The theory behind the approach is that an investor would be willing to pay no more than the present value of a property’s anticipated future net income. See Trout Ranch, LLC v. Comm’r, T.C. Memo. 2010-283, 2010 WL 5395108, at *4, aff’d, 493 F. App’x 944 (10th Cir. 2012).
The subdivision development method is a variation of the income method recognized by this Court previously. See, e.g., Crimi, T.C. Memo. 2013-51, at *64–65; Consol. Invs. Grp. v. Comm’r, T.C. Memo. 2009-290, 2009 WL 4840246, at *15; Glick v. Comm’r, T.C. Memo. 1997-65, 1997 WL 42357, at *5. It values undeveloped land by treating the property as if it were subdivided, developed, and sold. Glick v. Comm’r, 1997 WL 42357, at *5.
Id. at *13 (internal citations altered).[10] Despite noting that the subdivision method is “susceptible to manipulation and requires an appraiser to make many assumptions,” the Tax Court adopted the taxpayer’s use of the subdivision method as appropriate. Id. at *17 (punctuation omitted).
Present Day
By the time of the Champions Retreat decision, there was a significant amount of momentum behind the movement to limit legislatively the conservation easement charitable donation deduction vis-à-vis the Charitable Conservation Easement Program Integrity Act, which was signed into law on December 29, 2022. As a result of the Act’s passage, SCETs can no longer claim deductions greater than 2.5x any partner’s basis, and thus the valuation issues discussed in this article are largely moot going forward. That is, Congress legislatively addressed the perceived “loophole” that had propped up much of the SCET industry; by definition, SCETs can no longer be profitable for investors.
The Tax Court will continue to work through the backlog of cases involving deductions taken prior to the Act’s passage. See, e.g., Mill Rd. 36 Henry, LLC v. Comm’r, T.C.M. (RIA) 2023-129 (T.C. 2023) (ruling in favor of IRS on issue of valuation issue, reducing eligible deduction from $8,935,000 claimed value to $900,000 adjudicated fair market value). Notably, in Mill Road, the Tax Court did not assess a fraud penalty under Section 6663, expressly noting that such a penalty would necessarily require a taxpayer-donor’s knowledge of an appraiser’s deception and that even then, where the taxpayer-donor signs the IRS Form 8283 disclosing the low basis with the high claimed value, the opportunity for “deception” would be “complicated.” Id. at *23, n. 28. In other words, taking an aggressive position on value obviously poses risk for the taxpayer but does not necessarily, or perhaps ever, amount to fraud by the taxpayer where all pertinent information is disclosed to the IRS, at least in the civil audit context.
It remains to be seen whether DOJ-Tax will continue its aggressive investigation and enforcement, which has produced mixed results.[11] However, there is no question valuation will be critical in resolving all remaining SCET cases now under civil audit or pending in Tax Court where taxpayers had generally fared well until more recently.[12]
Conclusion
No matter what happens, we should all be guided by the law that was in place at the time the taxpayers participated in these transactions—i.e., cases like Kiva Dunes, Schmidt, and Champions Retreat—not the law as it exists today on the books or how it is presented in the court of public opinion. This is only just and fair, but more importantly, due process requires it.
Because of the complexity of the United States tax code, in a criminal tax case it is the government’s heavy burden to establish subjective intent—this is black letter law from SCOTUS in Cheek v. United States, 498 U.S. 192 (1991)—and thus each taxpayer must be afforded the absolute benefit of the doubt. That is, if a taxpayer relied in good faith on Kiva Dunes or any of the other cases explored in this article, the taxpayer is not guilty of a crime even if they were wrong about the law. To be guilty of a tax crime, the taxpayer’s actions must be prohibited, and the taxpayer must know it and violate the law anyway. And in the civil context, absent statutory or binding judicial precedent affirmatively prohibiting a legal position, a taxpayer generally acts in good faith when advancing a position that has a reasonable basis in the law.[13]
If we are being honest, Kiva Dunes and its progeny say exactly what SCET participants thought these cases said, and the participants were justified in relying on all of those cases. They would still be justified in relying on those cases today but for the passage of the new law by Congress, because that legislative action is what finally changed the landscape surrounding valuation methodology in SCETs through the imposition of strict limits on the basis multiplier that qualifies for the deduction.
The new law may well be for the best—after all, that is the faith we as citizens put into our legislators when we elect them to office—and I do not claim to be qualified to opine on the various critical policy factors that drove Congressional action to allow the deduction in the first place or more recently to create new limitations. However, I do know that if we abandon the bedrock principles of stare decisis and start judging cases based on the social and political mores of the day rather than the law, the result will be catastrophic. If that’s the plan, we may as well have Carl Spackler running the show.[14]
Brett A. Switzer leads the white collar litigation and government investigations practice at Berman Fink Van Horn P.C. in Atlanta. Last year, Mr. Switzer represented the lead defendant Jack Fisher at trial in the case styled as United States of America v. Jack Fisher et al, USDC NDGA Case No. 1:21-cr-231-TCB, conviction now on appeal to the Eleventh Circuit Court of Appeals. He can be reached at bswitzer@bfvlaw.com.
[1] At the outset, the author extends his most sincere gratitude to Emma Sammons for her invaluable assistance in preparing this article for publication. Ms. Sammons is presently a 3L at Emory University School of Law, where she is a Notes & Comments Editor on the Emory International Law Review, and candidate for J.D. in May 2024. Upon completion of the Georgia Bar Exam, she will continue her law practice as an associate at Berman Fink Van Horn P.C., where she clerked during the summer of 2023.
[2] There are 17 cases involving the following search terms – [adv: “conservation easement” AND apprais! AND method! AND “residential subdivision” AND “raw” OR “vacant” AND “highest #and best use”]. This is not a comprehensive review of all the relevant case law, nor is that necessary. This search does however provide a glimpse into the history of the law on HBU valuation and how the law has been applied by the courts over the course of decades.
[3] Reference is made to the 1980 sports comedy film Caddyshack starring Chevy Chase (playing Ty Webb), Rodney Dangerfield (playing Al Czervik), Ted Knight (playing Judge Smails), and Bill Murray (playing Carl Spackler). Coincidentally, 1980 was the same year the conservation easement donation tax deduction vehicle became permanent as a part of new I.R.C. Section 170(h) pursuant to the Tax Treatment Extension Act of 1980, Pub. L. 96-541, 94 Stat. 3205 (1980).
[4] This will be an important distinction in the context of conservation easements, which do not get bought and sold on markets and therefore lack comparable sales by definition.
[5] See Reilly, Peter J., Syndication of Conservation Tax Deductions – Why We Can’t Have Nice Things, Forbes (Sept. 3, 2020), https://www.forbes.com/sites/peterjreilly/2020/09/03/syndication-of-conservation-tax-deductionswhy-we-cant-have-nice-things/?sh=5ed692f91a37.
[6] For example, on December 23, 2016, the IRS issued Notice 2017-10, which identified all SCETs beginning January 1, 2010, and all substantially similar transactions, as “listed transactions” under the Regs. Sec. 1.6011-4(b)(2). In 2019, the IRS added SCETs to the “Dirty Dozen” list of tax scams. On or around August 25, 2020, the Senate Finance Committee released its report on SCETs, which “may have allowed a number of taxpayers to profit from gaming the tax code and deprived the federal government of billions of dollars in revenue” per remarks provided by Committee Chairman Chuck Grassley (R-Iowa) and Ranking Member Ron Wyden (D-Oregon), concluding a comprehensive investigation that was launched by the Senate in 2019, wherein the Senate urged Congress, the IRS, and the Treasury Department to take further action to preserve the integrity of the conservation-easement tax deduction.
[7] This article is not intended as an attack on Mr. Reilly or the myriad of other critics and commentators who wrote similar articles, nor does this author suggest that the negative publicity surrounding SCETs was necessarily unfounded. This article merely explores the circumstances surrounding the reliance by professionals in the industry on judicial authorities that supported the actions they took vis-à-vis the conservation easement charitable deduction vehicle.
[8] This article focuses on properties where HBU is determined to be a residential subdivision. Please note, however, there is an entire line of cases dealing with mining properties as well. See, e.g., Terrene Invs. Ltd. v. Comm’r, 94 T.C.M. (CCH) 136 at *5 (T.C. 2007) (“Without comparable properties, we turn to the DCF method.”); id. at n. 4 (citing Cloverport Sand & Gravel Co. v. United States, 6 Cl. Ct. 178, 194 (1984) (“Because the plaintiff’s property is an income producing property capable of producing a stream of income derived from what both parties concede is the property’s highest and best use, the income capitalization approach is a preferable valuation method.”).
[9] Notably, the IRS also circulates an audit guide to revenue agents that sanctions this method. See, e.g., Internal Revenue Serv., Conservation Easement Audit Technique Guide (rev. date Jan. 21, 2021) (available at https://www.irs.gov/pub/irs-pdf/p5464.pdf) (last visited Apr. 1, 2024). There was at least one earlier version circulated with a revision date in 2012.
[10] In case there was any doubt, the Tax Court goes on to explain how to appropriately conduct an appraisal using the subdivision method in a 6-step process. Id.
[11] See, e.g., Kristen A. Parillo, EcoVest Paid $6 Million to Settle DOJ Easement Promoter Suit, Tax Notes (Apr. 10, 2023) (exploring settlement of civil fraud action involving some 138 alleged transactions, earning an estimated $131 million in gross receipts, resulting in more than $2 billion in tax deductions).
[12] See, e.g., Stone III, William A., SCETs: Do Tax Court Valuations Reflect Government Rhetoric?, Tax Notes (Aug. 28, 2023), https://www.taxnotes.com/tax-notes-federal/conservation-easements/scets-do-tax-court-valuations-reflect-government-rhetoric/2023/08/28/7h201.
[13] This article does not constitute legal advice. What positions have a reasonable basis in the law is a fact-specific inquiry subject to interpretation by the IRS. A reasonable basis may be derived from one or more tax authorities, including the Internal Revenue Code, Treasury Regulations, Revenue Rulings and Procedures, Tax Treaties, Court Cases, Congressional Intent via Committee Reports, Private Letter Rulings, Actions on Decisions and General Counsel Memorandum, IRS announcements and notices, and IRS press releases. Thus, a taxpayer should consult with tax professionals based on their own unique facts and circumstances.
[14] According to www.wikipedia.com, Carl Spackler (played by Bill Murray) is a mentally unstable greenskeeper at Bushwood Country Club who is charged with the duty of ridding it of the gopher. Mr. Spackler famously executes this duty by detonating plastic explosives all over the golf course, resulting in complete destruction of Bushwood Country Club whereas the gopher emerges unscathed and dancing to the song “I’m Alright” by Kenny Loggins.