Judge Goeke dismisses the attempt to boost the valuation of an abandoned granite quarry by speculating on its future business operations by an owner with no expertise and no track record in Beaverdam Creek Holdings, LLC, Beaverdam Creek Investors, LLC, Tax Matters Partner, T. C. Memo. 2025-53, filed 6/2/25. There are enough sales of abandoned and active granite quarries in the Elberton Granite area batholith so that comparable sales indicate that the Beaverdamers overvalued the “before” while stipulating to a minimal “after” enough to earn a Section 6662(h) 40% overvaluation chop.

The problem with discounted cash flow (DCF) is that it values the worth of a business rather than the land whereon the business stands. Even if the land has valuable stuff beneath, it still takes equipment, people, capital, and knowhow to realize the same. The Beaverdamers had none thereof. And this was a classical Dixieland Boondockery.

The Beaverdamers bought the land from a little old lady who had to sell to pay off her late sister’s mortgage (she was ex’r). But little old lady had local lawyer. Judge Goeke says neither of them was a fool, T. C. Memo. 2025-53, at p. 62. And at close of  play, he finds the number paid them wasn’t so far off the FMV.

And the Beaverdamers’ numbers were incredible.

“BC Investors erroneously equated the (overstated) value of a hypothetical business to the fair market value of the easement property. Respondent advocated use of the comparable sales method, but his experts could have included more information regarding quarry/granite features in their comparable sales data. Considering the evidence, we value the easement property on the basis of our own examination of the record. We rely on the comparable sales method and [little old lady]’s effective sale of the easement property for $225,052 during 2017, as support for our conclusion that the before value of the easement property was $300,000.” T. C. Memo. 2025-53, at pp. 56-57.

If taking GA for granite rocks your socks, Judge Goeke’s decision is a must-read.