Palmer Ranch Holdings v. Commissioner, No. 14-14167 (11th Cir. 2016)
Annotate this CaseThis case stems from a dispute regarding Palmer Ranch's residential development (B-10). Palmer Ranch argued that B-10’s highest and best use was residential development under a Moderate Density Residential (“MDR”) zoning designation, which would allow between two and five units per acre, or 164 to 410 units total. Based on this highest and best use, Palmer Ranch stuck to its initial $25,200,000 valuation. The IRS countered with a maximum highest and best use of 100 units and a corresponding valuation of $7,750,000. The tax court held in favor of Palmer Ranch. The parties cross-appealed. The court affirmed the tax court's determination of B-10's highest and best use. However, the court reversed the ensuing valuation and directed the tax court on remand to either stick with the comparable-sales analysis or explain its departure. Whatever the tax court chooses to do, the tax court must keep its sights set strictly on the evidentiary record for purposes of selecting an appreciation rate, and ensure that it crunches the numbers correctly.
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