and issue regarding valuation into issues regarding the application of penalties i plan on focusing my time on the first three issues as your orders are where this case involves the donation of a conservation internal revenue code section one seventy age just last year this court analyzed in b c ranch that code section and announced that because it was adopted by an overwhelming majority of congress it should be reviewed under the ordinary standard of care as opposed to the strict standard to scrutiny often applied to intentionally created tax incentives the tax court your honors did the opposite it read into the code and regulations requirements which do not exist and which would make compliance with the code virtually impossible leading to a chilling effect on donations of conservation easements in applying this standard the court first determined that the easement failed to satisfy him to protect the outdoor recreation benefit in perpetuity the easement deed clearly in an ambiguous lee states that this property shall be used for the substantial and regular use of the general public that is precisely the parroting of what the regulation requires moreover it unambiguous lee gives the north american land trust the dunny the right and responsibility to enforce that provision it does so in the contract notwithstanding the tax code or look to some evidence to determine that nearly a decade after this season it was  public was in fact not being able to use a small portion of the easement property however your honour's are simply no requirement in the legislative history code or the regulations which require a taxpayer after he enters an errant sentence in the and then either the deed or the donation about the right of the public to have access there's just one sentence i think that the public doesn't happen on fettered right to access the property yes your honor and i think describing it as one sentence is an important aspect you've got numerous very detailed specific provisions contract shall be interpreted as providing a right of unfettered access to the public the commissioner of art i feel sorry for the lawyer that put that thing in there it looks to me like that was part of the form it needed to come  is it meaningful to say that the public has substantial regular use but not a right yes your honor i think first of all south carolina like virtually every other law requires the court to look to the four corners of the document and when possible to give meaning to each and every provision moreover it's a clear statute construction of contract that specific provisions should rule over general certainly general interpreted from when read in that context six point one four clearly means that although the public has to have substantial and regular use of this property there can limitations on their unfettered right of access just like any public park or public golf course there has to be some limitations on a right of access for instance the public has to come and check in with the pro shop and pay a fee although the reason it did says that has to be a fee that's not going to prohibit substantial regular use moreover the public can't come on the golf course at night and build a bonfire on the greens for instance six point one for merely states like every public park every public golf course that the public does not have an unfettered right of access to the property that's a plausible explanation maybe it's the right one we'll see if it was  case for at the time that you have pointed this to and i'm not picking up on that makes this distinction that you're suggesting maybe the difference between a license and a right and where we can more clearly accepted that that's a reasonable interpretation of carolina law or a more general law conservation easement well first of all you production ministries which gives a pretty good overview under south carolina law how you have to interpret provisions in a contract to give them all meaning substantially supports the taxpayers position understood your general concept but can you narrow this down focus and was there law the time not that that would be outcome determinative that that provision could be seen as responding to we had been hailed provisions of some such nature and been held interpreted in a certain way consistent with what you're telling us your honor it is there were no cases on this issue primarily because public recreation easements which provide for substantial irregular use are generally not the type of easements that are used normally a taxpayer reserves the right not to allow the public substantial and regular use which is why the specific provision that literally parrots the  regulation requiring substantial and regular use made this easement different than most easements that you see in this area and there actually has been no cases on such an easement if they post the  property yes your honor just like any public golf course or public park would do there were requirements about whether or not the public had unfettered right of access so they could not go into certain areas without for instance checking in with the pro shop or the gate house but your honor i think that's common with any again any public park or public golf course looking at the overall  creating some of the concern about exclusion is that correct or there is a good there and is there a different issue as to different parts of that it seems to me that the housing was definitely the public is excluded is it is claiming of the easement continues as to those two houses and that somehow these is justified in some way no your honor and that's a good point so at the time of av of this ease donation there actually was no golf course there was a layout for the golf course golf course had seized off course had ceased yes your honor got to understanding there was a functioning it was a golf course built but had not been particularly successful it was no longer being used when there's these meant was yes you're on two years prior to the easement donation golf course activities it stopped and this was all essentially green space when the easement was donated the plan was to create the golf course going in but the easement deed merely requires that it either be used for golf or some other passive recreational use i e a park it was the case that certain portion of this property became a functioning golf course for the public again and then a certain portion of the public in the sense of they joined the chorus paid the fee they would be allowed to use it but you didn't have to be a homeowner or own property in the area specifically address that issue within the park go against that it was the only park users those who were homeowners or otherwise i were not could just come from the general public there's conflicting evidence about that but i think a couple important points to that is you first of all there was no park or no posting until two years after this season and net was donated the taxpayer tissue after a donated the easement sold the property and then relocated to dallas texas and at that point it had no legal right building a reason to monitor what was going on it is the case that two years subsequent to that a park the bill baker park was built on the back portion of this property and the tax court did determine based on some very flimsy evidence that the public all the public was not being fair had that it used to that part however the taxpayer had no reason to be aware of that n when he valued this property he determined that it was subject to a use restriction in covering the property requiring it to be used as a golf course for a number of years however that use restriction was removed through the bankruptcy proceedings and no longer encumbered the property as of the date of the easement and you'll see that the tax court itself does not even mention that use restriction as an permit to developing this property what is so yes your honor the bankruptcy court removed that you know why it was determined to be in the best interest of well backing up the homeowners association the p had objected to the removal of the use restrict the bankruptcy or upon agreement of the parties and the determination that it was in the best interest of the bankruptcy proceeding did remove that use restrict and at that point affected some of the claims or something you're on tax crying or what i mean maybe the answer is that the record doesn't show this or you don't know the answer and that's ok that's a fair response but that's all very strange what happened here a bankruptcy court removing a use restriction there's got to have been a really important reason for that to have happened well your honor of the the taxpayer had various claims that the use restriction on the on the property was not enforceable under south carolina and other law including that the property owners association was not did not have standing to raise the  restriction and that was all resolved in the bankruptcy court as a matter of its decision apparently on its interpretation of the relevant law and that may have had to do with the amount of the tax claim in the case or think it did lead to some confusion as to timing especially in the misuse expert report but i think the tax tax court and everybody else is recognize that that use restriction did not in or the property date of the easement which is really led to some confusion about the conflicting values reported for instance in the bankruptcy court there was it was reported as two point three million and three point five million all of that was when it was subject to this use restriction and essentially because as the taxpayers expert testified mr bennett the bankruptcy court uses liquidation values and so it did not anticipate what this property could have been worth had that use restriction been removed is your point that by getting rid of the covenant that unleashed a substantial amount of value right if you could be now developed yes or on where is your evidence that that value was a pick your coming thirteen point four million the the taxpayers expert mr veale valued it at that terminating it had a development potential your hon there i don't think there's much disagreement that had this property been able to been developed it was located along a major highway leading into hilton head south carolina virtually surrounded by high end commercial development it was some restriction on the property because they were so concerned it would be developed and in fact he testified that they could never have afforded the property had the easement not been placed on it because its development potential was in their mind good morning a place the court my name is jennifer rubin and i represent the commissioner of internal revenue in this case and consistent with my opponent and i'm going to start with the conservation purpose and then he turned to valuation after that  one the most important things that was said in that opening argument and i think this is this is as close to court as i can get it normally an easement normally reserved the right not to permit access and he says what this is different this was a this was a public park creationism and it's not just a public recreation easement this easement through everything including the kitchen sink in and said it's for all of these different conservation purposes and all the conservation purposes as  source that has been cited by anybody to say what does a provision like six point one four actually meet well according to miss wing and the conservation easement handbook that she cites this is the sort provision traditionally used to say that the public can be excluded absolutely from the property and maybe apply haps king suggestion is correct this was an error that they put in all these different access but perhaps in fact quite fair from posing side is that depending on south carolina law says aware of this phrase comes from not limiting the public's right of access to the terms of whatever the ultimate use should there be a claim that i want to pay these fees i don't have to join this golf club i'm just coming in news is not a consistent way to read and i don't believe so i've never seen anything that reads this provision consistently with that and i don't think it's consistent with the playing on ambig language nothing shall be construed to give the right of access is consistent with the concept that you can exclude which is in fact how the subsequent owner has purchased and if you look at the restate the third for stamer property section fo of reasonable ordinary purchaser who is subject to this is not read it and i think it reasonable purchaser would say i certainly can exclude from at least a healthy chunk of this property which is how the peer way has interpreted it that is precisely what mike hayden the former p l o president stated when that's what they did when they did this park and it's not simply that something is that there's a post put out that say oh you can't come on here to start time the park is absolutely no trespassing mark when you come into this pop you're given a time that says you can only come in here for these purposes any other purposes trespassing so certainly healthy chunk of this is a fifty acre park healthy chunks of this property the public can be excluded absolutely and there's no way to determine based on this easement deed how much of this property might be in fact available to the public now on appeal tax payer has chosen to focus entirely on public for creation but a judge faced with interrupting this if this was was was just put forward before a judge is faced with an easement to it that has all of these different provisions so my opponent says general versus specific this seems pretty specific when you start talking about possibly needing to exclude somebody because of natural habitat it seems awfully specific to say oh this is an open met we don't need to let the public on it how allow them to enjoy vestas so whether it's something as general or specific may depend on which purpose you're looking at and the fact they want you to only look at one purpose does not change the fact that this deed was written to include so many things with so many different i mean be sure i understand what you're saying is that there are multiple uses permitted  under this deed and this the public access and with each one of these there are different access  property as long as the public still gets some stance on regular use that's not what this provision says it says nothing in this conservation easement shall be construed to create any right of access to the conservation area by the public a reasonable person reading this language would say i can't exclude people from the property and that's why we're pointing to what the peel away has done after purchasing the property and what not has not done namely not corrent the property but it doesn't need to be all of it maybe just need to be a lot of it and i don't know you know i think that's a pretty reasonable interpretation and again that's the how the p o way the subsequent purchasers reading it and not doesn't seem to disagree because the p r way is not being subtle you mention the fifty acres what percentage as a practical matter has been excluded from public on your believes it's a pretty large portion i'm not sure the exact acreage but this used to be a twenty seven hole course and they maintained eighteen holes and turned most of that much of the rest of it into this private park so i think that's a pretty substantial pause  trying to read all these provisions together you could very easily read it precisely as the p r i has done which is a need to allow the public to access some portion of this property for public workers but not anywhere near all of it and because of that we say it does not in fact protect the entire property for the conservation purpose a public plan that has to be the case i mean you know say you had two thousand acres and people part of the problem here is that there's really no there's no first limitation on the scope of sex you know you might seem to have some public access but it could be a very small portion of this land so even if let's say this was a specifically says they can't reduce the property to a private membership club they can't reduce the entire property to park membership club it certainly seems to be true but they certainly have maintained fifty acres of it as  a as a private park and the not doesn't seem to have any problem with this is and again they're not being subtle so this would seem to say that the interpretation that something or some of this land possibly even a large portion of this land and doesn't seem got reasonable to me the easier it is referred to as a conservation easement there's an explicit use by general public la guess i'll just take as a given your statement that that's not being practiced but it seems to me that's a violation of this provision if this was all a public act again this has multiple different conservation purposes and if you read six point one four in the way that tax payers tell you that's going to be inconsistent with the natural habitat conservation purpose which is in the deed maybe it's inconsistent with the open space provision  but it's not an absolute right there on the property right it to have an access to it under reasonable time place amount of restriction but it's a right to access so if you don't have a right to access and you can be excluded there's nothing in here that looks like a time for recreation right directivity and you say but it's not a right what i sort of silly is ok you can't come in at midnight you can't come in and occupy the entire space for your own party it has to be available for other people  they say it means you know what's under their interpretation you have no right to access so i can charge you a reasonable fee basically is a time place manner provision looks different than us this is not a  for just a little over two point four million in two thousand and two in two thousand and six in that and once they were in bankruptcy they told the court months worth three point five million dollars then they filed a disclosure statement later that year saying it's worth two point six million dollars that the value had gone down because the property was deteriorating i believe was the reason so in october two thousand and six they initiated twenty nine j at thirteen the association agreed that they would forbear from trying to enforce it four hundred eighty days in leicester was an attempt to develop the property and then they greet that if there w conservation easement put in they would therefore continue indefinitely so basically if people had taken any attempt to develop this property instead of putting in finding that there was no standing certainly seems like a hazardous more human to be third party beneficiaries to this use restriction so certainly i think that there's there's a plausible claim to say that the pilate could still  might take in also make clear that i think this is transcript i believe it's ten twenty five that in fact he also felt like the zoning would prevent development so yes they were so making sure that they were going to have noted phelim and i think the july two thousand and seven tax payer follows the second amended reorganization plan under that plan many creditors did not get full payment then also on that same date they moved to get approval of the silver chief point three million and specifically said this is fair value this is fair market value and did not at any point say assuming that the use restriction is still in place and in fact everything they needed to do other than get final judgments entered had already been done the court didn't make any findings about the use restriction it did based on settlements and defaults they reached a settlement with the development company taxpayer reached the settlement us you know i think the more reasonable interpretation here is real simple this property there are a lot of uncertainties it depends if there were a lot of reasons why it might not be able to be developed there was this use restriction that was still out there the p association could still turn around and try to force it there were zoning problems and and you see the testimony from from austin and we also made a look this was a golf course and it's very reasonable to say yeah you know you couldn't just  to develop it and so it all turned it had a value somewhere between two point three and two point six million dollars at most and so what you have here is is  and you know i think that what what really happened here is you had you had a tax court judge who looked at all the evidence and said i'm not buying with what the plaintiffs with the taxpayers for the use that was put on it was worth two point three million dollars consistent with what the top universal sociate paid and also what was right presented to the bankruptcy court  and the fact of the matter is this was a for profit business that bought this land owned by an experience businessman there's no one there's no competent of them to say they were motivated by anything other than profits if they thought that they could get all of this thank you very much ready for entire property defined as the entire two hundred forty one acres shall be used for this children of use of the general public there is no way by looking at the four corners of the season a deed to determine that six point one four somehow applied to a yet to be created fifty acre part and although the subsequent acts of the homeowners association in the north american land  t we believe are relevant for determining the contract the park is a mere one nine of this entire property roughly ten percent clearly the vast majority of the property is still being used for the substantial and regular use of the general public as to the issue of that in the commission or keeps referencing the use restrict this was argued in brief in court the tax corps never mentions the use restriction as an impediment to value it was gone as of the date of the easement the tax court did not appear to find it to be a problem this is important because in white house this court stated that the tax court is required to aid this court with a clear understanding of the ground or basis of its decisions specifically dealing with the highest and best use  it also said it is necessary for the tax court to make subsidiary findings necessary to render its all to make conclusions comprehensible if the tax court never referenced this use restriction which commissioner it wasn't restated at the time when the decision was made it was it was still clearly part of the case this is one way to look at it what do you say to that and why would it have to be articulated one of you so those central the debate has been about if as was the case the user stricture no longer in cumbered the property from a legal perspective on the date of the issue then if the court determined that maybe it had some impact on value then i think it was incumbent upon the tax court to describe what the effect of that was such that this court could analyze its  findings for that reason alone this case should be remained to determine whether or not the tax court even relied on that research moreover all these values that are being stated are all in reference to the property prior to the use restrict the use restriction did not uncover the property as of the date of the easement the homeowners association knew that and recognize that which is again why mr hagan testified that without the easement after the use restriction was removed without the easement the property owners association could not have afforded this property and court determine that the taxpayer loses on one of these two technical issues those issues are in no way attributable to the valuation issue and yes the supreme court did abrogate a line of cases in this court but it did not overrule tot tot is a specific instance in which a technical issue was unrelated to valuation subsequently and bay mine and some cases todd was extended to a different set of cases in which value was in or twined with the basis for the disallowance but woods clearly states that there has to be