BUCALEGIS.ccj.ufsc.br


CHIRON: Planning in an open-textured domain

KATHRYN E. SANDERS

Department of Mathematics and Computer Science, Rhode Island College, 600 Mount Pleasant

Ave., Providence, RI 02908 USA

E-mail: ksanders@ric.edu

Abstract. Planning problems arise in law when an individual (or corporation) wants to perform a

sequence of actions that raises legal issues. Many lawyers make their living planning transactions,

and a system that helped them to solve these problems would be in demand. The designer of such a

system in a common-law domain must address several difficult issues, including the open-textured

nature of legal rules, the relationship between legal rules and cases, the adversarial nature of the

domain, and the role of argument. In addition, the system’s design is constrained by the fact that the

intended users are lawyers, and its operation and output must be convenient for lawyers to use. In

this article, I describe a system called CHIRON that I have developed to explore solutions to these

issues. This system develops simple plans from representations of statutes and cases in the domain

of United States personal income tax planning.

1. Introduction

The popular view of lawyers is the trial lawyer – Perry Mason, Clarence Darrow,

or the lawyers on LA Law. Many lawyers, however, make their living planning

transactions, such as the sale of a piece of property, the establishment of a trust, or

the reorganization of a corporation.

Planning problems arise in law when an individual (or corporation) wants to

perform a sequence of actions that raises legal issues. For example, suppose you

want to sell your house. That transaction has both real estate and tax aspects. If you

give a lawyer information about your goals – do you want to reinvest the proceeds

in another house? – and facts relevant to the situation – how long have you owned

the house? do you live in it? do you have any other residence? – the lawyer will

suggest a plan or plans for achieving your goals, taking into account the legal issues

raised by the transaction.

In constructing plans, lawyers generally have two types of information to work

with: statutes and cases. In some domains, there are statutory provisions that are

so recent that no cases have been decided interpreting them. In general, however,

both statutes and cases must be taken into account.

In practice, lawyers often take advantage of a third source of information, plans

based on past experience of similar transactions. Often, however, no such plan is

available, perhaps because the lawyer has never performed this particular type of

226 KATHRYN E. SANDERS

§121. Exclusion of gain from sale of principal residence.

(a) Gross income shall not include gain from the sale or exchange of property if,

during the 5-year period ending on the date of the sale or exchange, such property

has been owned and used by the taxpayer as the taxpayer’s principal residence for

periods aggregating 2 years or more.

Figure 1. §121(a) of the Internal Revenue Code.

transaction before, perhaps because the law has changed so recently that no plans

are available. And even where there is such a plan, if it is challenged in court, it

must be justified in terms of the statutes and case law.

In this project, therefore, I examine the way in which plans are developed from

statutes and cases. Specifically, I focus on tax planning. Almost every transaction

has some tax aspect, so tax planning forms part of almost all legal planning; and

the way in which the statutes and cases are used in this area is typical of general

legal planning.

Statutes are rules that have been created formally, by legislation. They are published

by the government and often by private companies as well. For example,

consider §121 of the Internal Revenue Code, which now governs the tax treatment

of the income from the sale of a personal residence, given in Figure 1. The Internal

Revenue Code is the most important statute for United States tax planning.

It contains approximately 7000 sections.

Detailed as the Internal Revenue Code is, it still contains phrases that are not

defined within the statute, for example, the phrase “principal residence” in §121.

To qualify for the benefit of §121, a taxpayer must show, among other things, that

he bought and sold properties which belong to this category. These phrases are

defined partly by commonsense knowledge about the meaning of the words used

and partly by example, not by statute. In determining whether a transaction satisfies

a given statutory predicate, or planning a transaction that will satisfy it, a lawyer

must use both rules and cases.

What makes reasoning about these statutory predicates difficult – and interesting

is that defining them is not just a matter of inferring defining characteristics

from a set of examples. Generally speaking, there is no set of essential characteristics

shared by all positive instances of the statutory predicate. Some examples are

typical, and others are more or less similar to them along various dimensions. As a

result, classifying a particular object as an instance or noninstance of one of these

categories is not always a simple task.

This issue arises throughout legal reasoning, not just in tax. Indeed, it is part of

a general natural language problem. Many ordinary categories, such as “tiger” or

cup”, are surprisingly difficult to define. This indeterminacy has been studied in

linguistics and philosophy, where it is labeled open texture (Waismann 1945; Hart

1961; Lakoff 1987). Any planning rule expressed in natural language, such as “be

careful”, “never get involved in a land war in Asia”, or “buy low, sell high”, suffers

from the same problem.

CHIRON: PLANNING IN AN OPEN-TEXTURED DOMAIN 227

In any domain, open-textured rules can be partially defined by examples. The

legal domain has the advantage that examples are recorded and published. Each

court case is an example – an application of the law to a particular set of facts. Facts

and results are recorded by the courts in “opinions” and published, both by the

government and by private companies. Thousands of examples are readily available

in any law library.

The facts of these examples can be used as the basis for new plans. Since the

courts are bound by precedent, similar cases must be decided similarly. Thus,

planners attempt to construct plans that are similar (or identical) to examples of

previous successful plans.

In constructing a plan based on previous cases, a planner can make use of the

court’s reasoning. This must be included in the case report along with the facts

and result. In a case interpreting a statute, for example, the court will suggest

intermediate rules connecting the facts of the case to the open-textured statutory

predicates.

These rules have some predictive value. The courts are likely to follow them in

later cases. They are not required to do so, however. They are free to adopt new

rules, as long as the new rules are consistent with the results in all previous cases.

Thus, the courts’ reasoning in previous cases is useful in constructing plans, but

does not make the success of a plan certain.

For example, suppose you want to construct a plan for an academic who wants

to sell a house he has owned for two and a half years, but has just spent a year on

sabbatical away from home. Suppose you have §121 and one case to work with.

Suppose that the earlier case involved the following facts:

John and Jane Smith bought a house in Providence, Rhode Island in June, 1990,

and a second house in Chatham,Massachusetts in April, 1995. On September 3,

1998, they sold the house in Providence and bought a third house in Barrington,

Rhode Island two days later. They are bankers at Fleet. Before the sale, they and

their children lived in the Providence house most of the year; now they live in

the Barrington house most of the time. They stay in the Chatham house (on

Cape Cod) for two weeks during the summer and occasional weekends during

the rest of the year.

Suppose the holding in that case was that the Providence house was their “principal

residence” before the sale, so the income from the sale of the Providence

house qualifies for exclusion under §121, and the court’s reasoning was that if a

taxpayer has more than one residence, his or her “principal residence” is the one

where he or she spends the most time.1

By the reasoning in the Smiths’ case, your client’s house is not his principal

residence, since he has not spent any time there for the past year. On the other hand,

if your case comes to court, you could argue that “principal residence” should be

1 Like the other examples in this article, this one is strictly hypothetical, and not to be relied upon

as tax advice.

228 KATHRYN E. SANDERS

defined as, for example, the residence closest to the taxpayer’s job, where he or she

is registered to vote, and from which his or her tax returns are filed. Moreover, this

rule would be consistent with the facts of the previous case, since the taxpayers

there worked in Providence, not on the Cape. Therefore, a court would be free to

adopt this rule and hold in favor of your client.

The use of open-textured rules and examples has a pervasive effect on legal

reasoning. It makes the legal system flexible. The fact that terms like “principal

residence” are underspecified means that the courts can respond to changing

circumstances. For example, they can interpret “principal residence” to cover cooperatives

and condominiums, even if those forms of ownership did not exist at the

time the statute was passed. Similarly, the First Amendment protection of freedom

of the press can be extended to cover television and radio, as well as newspapers.

On the other hand, because the system is flexible, it is also uncertain. In law, unlike

domains such as chess, it is impossible to prove a plan correct. This uncertainty

is not due to lack of factual information (we can assume complete knowledge of

the facts); but to the underspecified nature of the rules. Given complete information

about the client’s situation and the relevant law, an experienced lawyer can give

an opinion about the probability of success of a given plan, but even the most

conservative plan is not certain to succeed.

Because there is uncertainty, there is room for argument. Lawyers are trained

to find support for different conclusions in a given set of cases. A large part of a

lawyer’s training involves learning to make arguments for and against the application

of some statutory predicate, and for and against the similarity of a previous

case to the current one. This is one of the key legal skills, particularly in the Anglo-

American legal system (Ashley and Rissland 1987; Levi 1949; Llewellyn 1930).

Anglo-American law “requires the presentation of competing examples” (Levi

1949, p. 5). Although one result may be more likely than another, it is generally

possible to make these arguments in both directions.

Ideally, experts in other domains would reach the same conclusion: all doctors

would give the same diagnosis, all engineers would agree on how to build a building

that would be safe in an earthquake, and so forth. In fact, experts in medicine,

engineering, and even mathematics disagree, and find it useful to be able to argue

for and against particular conclusions (see, e.g., Lakatos 1976). The ability to argue

for and against a particular conclusion is useful in many domains. For lawyers it is

central; and as a result, the process is particularly well-illustrated in law.

Tax planning is no exception. Here, the adversaries are the taxpayers and the

government. Taxpayers seek to exclude or defer items of income and deduct expenses,

and the government seeks to include income and disallow deductions. Each

precedent can be viewed as the execution of a plan by the taxpayer in that case,

some successful (the favorable precedents) and some unsuccessful (the unfavorable

ones). Taxpayers must construct plans that are similar to favorable precedents and

different from unfavorable ones in some relevant way. If the similarity is too distant,

CHIRON: PLANNING IN AN OPEN-TEXTURED DOMAIN 229

or the differences are too small, the plans will be vulnerable to challenge by the

government.

The open-textured rules and examples interact in interesting ways. Being reminded

of a similar case directs a lawyer’s attention to the rules applied in that

case; being reminded of a potentially applicable rule directs his or her attention

to the cases interpreting that rule. In computational terms, cases limit the search

through the statutory rules. If a lawyer knows of a case involving a plan similar

to his or her client’s, the case report will indicate which rules were applied to that

plan. Similarly, rules limit the search through the case base. If the lawyer knows

what statutory rule he or she is interested in, it is easy to retrieve exactly the cases

interpreting that particular rule.

In this article, I describe CHIRON,2 an open-textured planning system in the domain

of United States individual income tax. CHIRON solves a cluster of problems

having to do with buying, selling, renting, and owning residential housing.

CHIRON is an exploratory system. By this I mean the type of system described

in Hendler (1995):

I discovered that, much to my amazement, many members of the biological

research community spend their time doing what many AI researchers do –

building systems! In fact, I was even more amazed to discover something else

the systems built by the biochemist are heavily used in experimentation during

the exploratory stages of theory formation! That is, these systems are not

created for running statistical tests to confirm what theorists already believe

(the Baconian ideal of experimentation as it is usually presented to us) but are

used to help develop those theories.

These systems are designed to have certain properties and then tests are run, not

to prove a theory correct, but to explore what happens. Only after exploration are

more precise theories formed and rigorously tested. The success of an exploratory

system is determined, not by whether its output is correct, but by the properties it

incorporates and whether exploration of those properties using this system suggests

interesting directions for future research.

CHIRON was designed to have the following properties:

- it reasons with both cases and rules;

- the rules are extended, limited, and partially defined by the concrete facts of

particular cases;

- it has a detailed representation of case facts, corresponding closely to the facts

given in the case report;

- it distinguishes between conservative and aggressive plans, reflecting the

adversarial nature of the domain; and

- it gives a substantial amount of control to the user, reflecting the expertise of

the system’s hypothetical users.

2 Named for the centaur in Greek mythology, known for giving good advice.

230 KATHRYN E. SANDERS

This list can be interpreted as a partial theory of legal planning, embodied in

CHIRON. CHIRON’s tests were not run to prove or disprove this theory, however, but

rather, as in the biological systems described above, to explore what would happen.

In a young discipline like artificial intelligence and law, open-ended exploration is

particularly important, and many AI and law programs, such as HYPO (Ashley

1991), GREBE (Branting 1990b), and Gardner’s program (Gardner 1987), can also

be considered exploratory programs in this sense.

In Section 2, I discuss CHIRON’s design, implementation, and knowledge representation;

in Section 3, I discuss examples of CHIRON’s execution; in Section 4,

I review the related work; and in Section 5, I summarize the lessons learned from

this project.

2. Design and implementation

2.1. OVERVIEW

An overview of CHIRON’s architecture is given in Figure 2. At the top level, the

system is made up of several modules: the Classifier, the Strategy-Retriever, the

Strategy-Processor, the Combination-Retriever, and the Combiner. The Strategy-

Processor, the heart of the system, is shown in detail.

CHIRON’s input generally includes both goals – the action or actions a client

intends to perform – and some background information. The goals may be missing

if the action has already been performed, for example if the client has already sold

his house. Given this input, the Classifier applies rules to determine what types of

transactions are involved. Transactions are classified according to the type of rights

and property transferred. Transfers can be gifts, sales, rentals or loans; property

can be money, tangible or intangible personal property, real estate, or services. For

more details of the transfer types and property types, see Sanders (1994).

The Strategy-Retriever takes these transactions, retrieves the past cases indexed

under those transactions, and returns a list of the tax-reduction strategies used in

those cases. These strategies are expressed in the form of a path through the space

of possible plans, specifically, a sequence of decomposition rules that can be used

by the hierarchical planner to transform the user’s goals into one of the candidate

partial plans in the hierarchical planner’s repertoire.

The Strategy-Processor then calls the hierarchical planner, which attempts to

construct a plan for each of the strategies suggested by previous cases, backtracking

between plans. For each strategy, the hierarchical planner first constructs an

abstract plan, including the taxpayer’s goals, if any, and the general system goal of

reducing the taxpayer’s income tax. There are a number of ways this top-level plan

can be refined: the system can attempt to show that no taxable income results from

the transaction, or if that fails, exclude income, defer it, attribute it to someone

other than the client, or find deductions or credits. In addition, there are combined

plans, since several of these approaches could apply simultaneously to the same

transaction. Each of these plan refinements, in turn, can be refined in several ways.

CHIRON: PLANNING IN AN OPEN-TEXTURED DOMAIN 231

.

Figure 2. CHIRON’s architecture, with details of the Strategy-Processor

Some plans can be repeated with different variable bindings; some can be repeated,

but not during a given tax year; and others can’t be repeated at all. The plan space

is not deep, but it is potentially very wide. The hierarchical planner refines the toplevel

plan as far as it can, using suggestions from the Strategy-Retriever, until all

the remaining tasks are either primitive or open-textured.

The case-based planner then attempts to refine the open-textured partial plan. It

instantiates the prototype plan, adding facts and changing parameters as necessary

to fit the current situation. Next, it retrieves all the previous cases where the taxpayer

executed, or attempted to execute the current strategy. For each such case,

if it involves any facts comparable to those in the current situation, the case-based

planner computes a mapping between the facts of the current situation and those of

the previous case. The result of the mapping is a list of pairs of facts that match, a

list of pairs of facts that don’t match but are comparable, a list of facts that appear

only in the previous case, and a list of facts that appear only in the current situation.

The case-based planner then calls the Argument-Builder module to construct a

subset lattice, storing the current situation at the root, and the prototype and previous

cases at nodes determined by the number of facts they share with the current

232 KATHRYN E. SANDERS

situation. This use of a subset lattice to capture the relationship between a set of

cases and the current situation is based on HYPO’s, with the difference that CHIRON

uses the case facts, while HYPO uses dimensions inferred from the underlying facts.

Unlike CHIRON’s case facts, HYPO’s dimensions incorporate substantial domain

knowledge. They “identify the features that are the bases of important similarities

and differences among cases” (Ashley 1988, p. 377).

The case-based planner then considers each of the dimensions on which the

current situation is weaker than the prototype, if any. If the plan is stronger than at

least one successful case on each of these dimensions, then the case-based planner

returns to the hierarchical planner a set of steps that can be substituted for the

open-textured plan step. The hierarchical planner continues refining the plan until

all the steps are primitive, and Report-Results prints out the plan and relevant

citations. If it is weaker on some dimension than any previous case, but there is

a “trend” towards weakening cases along that dimension (defined as two previous

cases where the taxpayer won with increasingly weak positions), then the new set

of steps is also returned to the hierarchical planner. Otherwise the plan is rejected.

After the Strategy-Processor has processed each plan, Report-Results prints out

the results for the user. If a plan is rejected by the case-based planner, Report-

Results prints out the weaknesses that caused the plan to be rejected and relevant

case citations. Otherwise, Report-Results prints out the plan and citations to relevant

provisions of the Internal Revenue Code and the most-on-point previous cases.

It then gives HYPO-style arguments for and against the success of the plan and

indicates the ways in which the plan is weaker than the prototype (if any) and the

support provided by previous cases for each weakness.

Next the Combination-Retriever takes a list of tax-reduction strategies, retrieves

the previous cases that executed any of those strategies, and returns a list of subsets

of those strategies that have been used successfully in combination in past cases.

This module looks only at the strategies and whether they succeeded in combination,

without considering the facts of the current situation or comparing them to

the facts of previous cases.

Finally, the user selects a combination of strategies for the Combiner to examine.

The user may choose one of the combinations suggested by the Combination-

Retriever or some other combination, and may continue to request different

combinations until he or she is satisfied. After each request, the Combiner calls the

hierarchical and case-based planners to construct, if possible, a plan and supporting

arguments for the desired combination, and calls Report-Results to print out the

plan and supporting arguments, if the plan is being recommended, or if not, the

reasons why it is being rejected.

When called by the Combiner, instead of backtracking, it constructs a plan for

the first strategy and then attempts to add steps to achieve each additional strategy.

Whether a combination of plans can be recommended depends on the facts. The

hierarchical planner rejects combinations that involve a direct conflict, for example

if one plan requires that the taxpayer sell a house and the second requires that he

CHIRON: PLANNING IN AN OPEN-TEXTURED DOMAIN 233

or she give it away. The case-based planner determines whether the combination

has been tried before, and if so, whether it succeeded in previous cases. A lack

of case support does not cause a plan to be rejected, however. As long as there

is no obvious conflict, CHIRON constructs the combined plan and reports the case

support for the combination, if any; the final decision whether to risk executing the

plan is left to the user.

2.2. KNOWLEDGE REPRESENTATION

CHIRON’s knowledge base includes representations of statutory rules, cases, safe

harbor plans (prototypes), and the relationship between the rules, prototypes, and

cases.

Since CHIRON is a tax planner, its knowledge base must include part of the tax

law. The rules governing the United States income tax are contained in Subtitle

A of the United States Internal Revenue Code. Subtitle A in turn is broken down

into more than fifteen hundred sections, each of which can be anywhere from a

paragraph to several pages long.

These rules fall into a few broad categories. First, there are rules concerning

the items that should be included in the taxpayer’s income, for purposes of the tax.

Gifts received by the taxpayer, for example, are not counted as income, but salary

and interest on bank accounts generally are. Second, there are rules providing for

deductions – items that may be subtracted from the taxpayer’s income before the

tax is calculated. There are rules for calculating the amount of income or loss

generated by selling a piece of property. There are rules for computing the amount

of tax, once the net income has been calculated. And there are rules specifying

credits, amounts that can be subtracted from the tax itself before it is paid.

These statutory rules form the basis for the hierarchical planner’s decomposition

rules. Following the same basic structure as the tax rules, the hierarchical planner

starts with a top-level system goal of reducing the taxpayer’s taxes. This can be

achieved by finding credits or reducing taxable income. Reducing taxable income,

in turn, can be achieved by finding exclusions, showing that income should be

attributed to someone else, finding deductions, or deferring income. The plan of

finding a deduction can be achieved by establishing that one has satisfied Section

121, and so forth. This basic framework is shown in Figure 3.

Examples of the hierarchical planner’s rules are shown in Figure 4. The first of

these rules states that one way to reduce a taxpayer’s taxable income for the tax

year starting on ?start-year and ending on ?end-year is for the taxpayer to deduct

expenses during that time period. This corresponds roughly to Section 63 of the

Internal Revenue Code, which provides, “[T]he term ‘taxable income’ means gross

income minus the deductions allowed by this Chapter . . . ” The second rule states

that one way for the taxpayer to deduct expenses during a given year is to establish

that he or she has satisfied Section 1034 of the Internal Revenue Code during that

year.

234 KATHRYN E. SANDERS

.

Figure 3. Part of the plan hierarchy

(todo ?tsk (occurs (reduce-taxable-income ?taxpayer)

?start-year ?end-year)

(plan

:id 14

:steps

((step1 :action (occurs (deduct-expenses ?taxpayer)

?start-year ?end-year)))))

(todo ?tsk (occurs (deduct-expenses ?taxpayer)

?start-year ?end-year)

(plan

:id 141

:steps

((step1 :open-textured

(establish (satisfied Section-1034 ?taxpayer)

?start-year ?end-year)))

:citation 1034))

Figure 4. Examples of CHIRON’s rule schemas.

Each rule gives the hierarchical planner a task and a plan for achieving that

task. Each plan includes a list of steps, which may be of type “primitive”, type

action”, or type “open-textured”. Action steps and primitive steps are types that

can be found in many planners, the former being steps that the planner can reduce

into a more concrete plan, and the latter, steps that can be part of a final executable

plan. The open-textured steps, also called “strategies”, are unique to CHIRON.

These strategies represent the open-textured rules. The hierarchical planner, whose

CHIRON: PLANNING IN AN OPEN-TEXTURED DOMAIN 235

knowledge is derived only from statutory rules, is unable to reason about opentextured

steps, but they are not primitive, so they cannot be included in the final

plan as they stand.When the hierarchical planner encounters an open-textured step,

it must call the case-based planner for help.

A single strategy may correspond to several pages of text: the pre-1997 §1034,

for example, was about four pages long, but it corresponds to a single strategy, with

the token “Section-1034”. Other strategies include deduction of moving expenses,

deduction of mortgage interest, exclusion of the value of housing provided for the

convenience of the employer, the one-time exclusion of gain on sale of a residence

by the elderly provided by the pre-1997 §121, like-kind exchange of property, and

deduction of business travel expenses. Since taxpayers construct plans for each

strategy as a whole, and previous cases illustrate the entire strategy, CHIRON also

represents and reasons about each strategy as a whole.

From the hierarchical planner’s point of view, strategies are a single token.

More accurately, considering CHIRON as a whole, each strategy is represented by

a prototype; a set of deformations, or ways in which the prototype can be adapted;

and a set of past cases where the taxpayer attempted (successfully or unsuccessfully)

to execute the strategy. All of these knowledge sources are indexed under

the strategy-token and retrieved when the case-based planner reasons about the

strategy. Another way to look at this is that each strategy corresponds to a region

partially defined by a set of cases, with the prototype at the origin. The boundary

of the region is extended by positive cases and limited by negative ones.

2.2.1. Cases

CHIRON’s knowledge base also includes representations of twenty-four United

States tax cases. These cases are used in a variety of ways: to suggest partial plans

for the planner to consider, to outline the limits of the space of possible plans,

and as the basis for arguments for and against the success of a particular plan. In

order to support these tasks, each case representation includes the case’s name (i.e.,

its official legal citation), short-name (an abbreviated form of the citation for use

in text), court, date, facts, strategies involved, and holdings of the case, as well as

various indices. Information about which features strengthen or weaken a case with

regard to a particular strategy is stored separately.

Part of the representation of Hughston v. Commissioner, T.C.M. (P-H) 50,188

(1950), one of the cases in CHIRON’s case-base, is given in Figure 5; for the full

representation and the original text of the case, see Sanders (1994).

As shown in Figure 5, the representation of case facts includes both detailed

facts and abstractions from those facts. The abstractions are those that seemed

useful, based on the reasoning in the particular case, other cases, or general domain

knowledge. The detailed fact representation corresponds closely to the facts as

given in the case report. It is not exact – for example, the taxpayer in this case

was employed by Shell “during 1947 and for some time prior thereto”. The exact

date is not given, nor is it relevant to the taxpayer’s sale and purchase of two houses

236 KATHRYN E. SANDERS

(make-case

:name "Hughston v. Commissioner, T.C.M.(P-H) 50,188 (1950)"

:short-name "Hughston"

:court "Tax Court"

:date 1950

:facts ’((occurs (individual-return return2) (1947) (1947))

(occurs (taxpayer return2 Hughston) (1947) (1947))

(occurs (house house1) (October 1945) (December 1947))

(occurs (real-property house1)

(October 1945)(December 1947))

(occurs (spatial-part room1 house1) (1947) (1947))

(occurs (bathroom room1) (1947) (1947))

(occurs (room room1) (1947) (1947))

(occurs (real-property room1) (1947) (1947))

(occurs (floortype room1 tile) (1947) (1947))

(occurs (house house2) (October 1945) (December 1947))

(occurs (real-property house2)

(October 1945)(December 1947))

(occurs (physically-occupy Hughston house1)

(October 1945) (February 27 1947))

(occurs (physically-occupy Hughston house2)

(February 28 1947) (1951))

...

(occurs (selling selling1)

(February 27 1947)(February 27 1947))

(occurs (seller selling1 Hughston)

(February 27 1947) (February 27 1947))

(occurs (object selling1 house1)

(February 27 1947) (February 27 1947))

... )

:action-types ’(:sale)

:property-transferred ’(:real-property :cash)

:property-received ’(:cash :real-property)

:transfer-types

((:sale :real-property :cash)

(:sale :cash :real-property))

:strategies ’(:like-kind-exchange)

:holdings ’((:like-kind-exchange :government)))

Figure 5. Part of CHIRON’s representation of Hughston v. Commissioner.

CHIRON: PLANNING IN AN OPEN-TEXTURED DOMAIN 237

in 1947, so I simply approximate the starting date of his employment as 1946. In

general, however, the goal was to stay as close to the facts given in the case report

as possible.

CHIRON’s case structures are much like HYPO’s legal case frames (Ashley

1991); both include the official legal citation, a shortened form of the citation, the

open-textured provisions interpreted by the court (“claims” for HYPO, “strategies”

for CHIRON), holdings, and facts. Both reflect the way that lawyers analyze cases.

Law students are taught to “brief” cases, that is, to prepare short abstracts of

cases including their important elements: the name, court, and date, the facts, the

holdings, and the ratio decidendi, or reasoning in the case.

Neither system’s case representation includes the court’s reasoning. The Tax

Court cases that CHIRON uses often have little explicit reasoning. Like HYPO,

CHIRON captures some of the courts’ reasoning along with general domain knowledge,

without associating it with specific cases, in the form of knowledge about

which features strengthen or weaken a case and the ways in which cases are

compared and contrasted.

CHIRON’s representation also includes the name of the court deciding the case.

That information is not used in the current implementation. In future work, however,

CHIRON’s arguments could be refined by making use of this information. To

support more subtle arguments based on the identity of the court, it would also be

useful to include the procedural context of each decision, as suggested in Berman

and Hafner (1991).

The facts given in the case report and useful abstractions from those facts

are represented as a list of propositions in a modal temporal logic with a formal

syntax and semantics, an extension of the temporal logic developed by Shoham

(1988), modified to incorporate the modal operators “know”, “believe”, “want” (or

goal”), “obligated”, “permitted”, and “prohibited”. This language is influenced

by the work of McCarty in representing legal concepts, especially (McCarty 1977,

1989b). It is flexible enough to represent basic concepts such as property and time,

plus the unpredictable idiosyncratic details that occur in each new case, such as the

fact that a kitchen in a house has a tile floor, or the taxpayer is a war veteran, or

the taxpayer has two children, one of whom is ten years old. The language used for

case facts is the same as the language used for input.

Timing is critical in tax problems, so it is necessary to represent the time of

actions and events. The token “*now*” is used to indicate the time at which the

plan is being constructed, some point in time later than all the cases in the case

base and earlier than the performance of the client’s intended actions. The tokens

*beginning-of-time*” and “*end-of-time*” are arbitrarily assigned the dates of

January 1 in the year 1 and December 31, 99999, respectively. A fact that is always

true is said to hold over the interval from *beginning-of-time* to *end-of-time*.

The endpoints of these intervals correspond to points in time. Time constants can

be the year (e.g., (1776)), the month and year (e.g., (July 1776)), or the month, day,

238 KATHRYN E. SANDERS

and year (e.g., (July 4 1776)). So far, this has been sufficiently precise; it would be

simple to add the time of day, if that became necessary.

Certain intervals of time are also important in this domain: the length of time the

taxpayer has owned a particular piece of property, the length of time during which

the taxpayer occupied a piece of property, the amount of time the taxpayer had

been away from a piece of property before selling it, the time elapsed between one

sale and another, and so forth. Intervals are represented as triples (years, months,

and days).

Note that actions and obligations may have distinct times. Generally, they will

coincide, because as a rule, the system needs to reason about the relationship

between an agent’s actions and the obligations or prohibitions that affected those

actions at the time they were performed. But sometimes a legislature will pass a

law now obligating or prohibiting the performance of a certain action next year,

and the fact that that prohibition is in effect now will affect plans made for the

future, so it can be useful to express the distinction.

It is also necessary to represent various types of property, property rights such

as ownership and possession, and the ways in which those rights can be transferred.

The United States’ income tax is transfer-based; that is, tax is triggered by

the transfer of money or property from one legal entity (individual, corporation,

trust, etc.) to another (Chirelstein 1988). Concepts of property, property rights, and

property transfers are central to this domain. Some of these concepts were already

formalized in Sanders (1989a, b); others, I added as necessary.

Property is divided into categories which are often treated differently by the tax

system: real property, tangible personal property, and intangible personal property.

Intuitively, real property includes land and buildings: houses, condominiums, cooperatives,

and so on. Tangible personal property includes tangible property other

than real property, such as cars or books. And intangible personal property includes

cash, stocks, and the rights of a tenant to his or her rent-controlled apartment.

Own” and “possess” are primitives in this language. Intuitively, ownership is

a collection of legal rights, including the right to possess, use, give, rent, or sell an

object. By contrast, one possesses an object if one physically controls it. Thus, if a

taxpayer rents a house, he or she possesses the house, even though it is still owned

by the landlord. Anyone who borrows a book, possesses it, even though they do

not own it.

Transactions are classified according to the type of rights and the type of property

transferred. A transfer of property can be a sale, gift, rental, or loan. For

this purpose, I define a sale as a transfer of permanent ownership of property in

exchange for a price; a gift, as a transfer of permanent ownership of property

in exchange for which the transferor receives nothing; a rental, as a temporary

transfer of possession in exchange for a price; and a loan, as a temporary transfer

of possession in exchange for which the transferor receives nothing. The transferors

are individuals who are legally capable of owning property, that is, human beings,

partnerships, corporations, and so forth. Services are generally performed by in-

CHIRON: PLANNING IN AN OPEN-TEXTURED DOMAIN 239

dividuals, though a corporation or partnership may have its employees perform

services on its behalf. The property transferred is anything that can be owned,

tangible or intangible. Property can be transferred in exchange for cash, other

property, or services; services can be transferred in exchange for cash, property,

or services.

These transactions are reified. For example, in Hughston, the taxpayer sold a

house. Part of the facts of that case are represented as follows:

(occurs (selling selling1)

(February 27 1947) (February 27 1947))

(occurs (seller selling1 Hughston)

(February 27 1947) (February 27 1947))

(occurs (object selling1 house1)

(February 27 1947) (February 27 1947))

In other words, there was a sale on February 27, 1947, the seller was Hughston,

and the object of the sale was a certain house, house1.

In this representation, the seller, the object, the payment, and the buyer are all

expressed as separate relations to the reified “selling”. Rentals, gifts, loans, employment

transactions, and volunteering are represented similarly. This approach

makes it possible to represent transactions where, as here, part of the information

is unknown. Because there was a sale, there must have been a buyer, but no information

about the buyer is given in the case, and it is not needed to reason about

the tax consequences of the sale to the seller. The system needs a representation

that can handle this incompleteness. The representation also allows us to represent

transactions where there is more than one individual with the same role, where the

taxpayer received both real estate and cash in payment, where there are two buyers,

two pieces of property are sold, two things are received as part of the same gift, and

so forth.

Note that in Hughston, the facts that house2 is a house and is also a piece of

real property, are both included in the case representation. For each object in a case

representation, both its types and abstractions from those types are included.

In reasoning about property, I have also found it necessary to represent certain

basic spatial concepts: location, nearness, distance, area, and the idea that one piece

of property is part of another, which I call “spatial-part”.

Other concepts related to property that I have found useful include physical descriptions,

such as the type of floor in a room and the fact that one piece of property

contributes part of the value of a whole package. For example, in comparing the

two houses bought and sold by the taxpayer in Hughston, the court noted that one

had a tiled kitchen and the other did not:

(occurs (house house1) (October 1945) (December 1947))

(occurs (spatial-part room5 house1) (1947) (1947))

(occurs (kitchen room5) (1947) (1947))

240 KATHRYN E. SANDERS

(occurs (floortype room1 tile) (1947) (1947))

(occurs (house house2) (October 1945) (December 1947))

(occurs (spatial-part room7 house2) (1947) (1947))

(occurs (kitchen room7) (1947) (1947))

(occurs (not (floortype room7 tile)) (1947) (1947))

The court also noted that one of the houses had three bathrooms, plus a half-bath,

and the other had only one:

(occurs (number-of-bathrooms house1 3.5) (1947) (1947))

(occurs (number-of-bathrooms house2 1) (1947) (1947))

I have also found it useful, particularly in the context of employment transactions,

to express knowledge about types of organizations, occupations, and work.

Employers include corporations, universities, and the government, for-profit and

tax-exempt organizations. Types of services performed all fall into the general

category of “labor”; they include, for example, research, teaching, and the practice

of law. Employees also fall into certain categories. Hughston was a lawyer; he

was also an individual and a taxpayer. Individuals in other cases fall into other

categories, such as “war veteran”. They are students at particular institutions and

parents or children of other individuals.

Some tax provisions relate to age, so I define predicates to express a person’s

(or thing)’s age and the fact that one person (or thing) is older than another:

(occurs (age child1 10) (1947) (1947))

(occurs (older child1 child2) (1947) (1947))

Within the tax domain, this project focused on a cluster of provisions having

to do with residential housing. Actions that are important in this domain include

maintaining and occupying the property in question. In Trisko v. Commissioner,

29 T.C. 515 (1957), the taxpayer occupied his house for several years, then moved

abroad temporarily and rented the house to a tenant who took care of it in his

absence, and then found when he returned that a strict rent-control law had been

passed that had the effect of prohibiting him from returning home. A portion of

these facts is represented as follows:

(occurs (physically-occupy Trisko house1)

(October 1944) (February 1948))

(occurs (maintain lessee2 house1)

(February 1948) (October 9 1951))

(prohibited (occurs (physically-occupy Trisko house1)

(1951) (1951)) Law (1951) (1951))

CHIRON: PLANNING IN AN OPEN-TEXTURED DOMAIN 241

In some cases, the taxpayer is occupying more than one residence at a particular

time (for example, the date of sale); if the number of the taxpayer’s residences is

given in the case, I represent that as well.

Finally, there are certain primitive states and events that are specifically related

to the tax domain: filing and signing of forms, being a taxpayer on a particular

return, and types of returns.

In addition to working with the facts that are explicitly stated in the cases,

CHIRON can also make certain limited inferences from those facts. First, inferences

about property types, types of work, types of employer, and types of transaction

are implemented as forward-chaining rules that fire when the input facts are first

asserted. Thus, for example, if the input facts include the fact that a given piece of

property is a house, then the rule that houses are real property will fire, and the fact

that the given house is also real property will be added to the knowledge base.

Second, the case-based planner makes inferences that are implemented as Lisp

functions called by the case-based planner, rather than as forward or backwardchaining

rules. Most of these inferences involve reasoning about time: for example,

determining how long the taxpayer has occupied a given piece of property, how

much time passed between the sale of one piece of property and the purchase of

another, and what the taxpayer’s age is today, based on his age at some earlier date.

In addition to temporal inferences, the case-based planner counts the instances

of certain propositions in the input. For example, with respect to the rollover

strategy, it computes the number of residences the taxpayer has at the date of sale

by retrieving all the instances of the taxpayer occupying any residence on that

date, and counting them. This kind of inference might be difficult to formalize in

general, but since the number of possible instances of each type of fact is bounded,

the problem becomes relatively simple. With a closed-world assumption, that all

the relevant facts having to do with the taxpayer’s residences, tax forms filed, and

so forth, are included in the input, and a unique-names assumption, that any two

distinct terms can be assumed to be unequal, axioms can be written to cover all

possible cases.

2.2.2. Prototypes

In addition to representations of actual legal cases, the casebase includes prototype

cases. Prototypes are represented using the same structure as cases, but indexed

separately.

CHIRON’s prototypes are not real cases. In Protos, actual previous cases are

used as prototypes (Bareiss 1988). Both approaches are influenced by work in

psychology suggesting that concepts are best represented by a set of more or less

typical cases, interrelated by “family resemblances” (Rosch and Mervis 1975). In

law, the reported cases are not typical, almost by definition: the standard, typical

cases do not go to court. None of the court cases in CHIRON’s case base is suitable

for use as a prototype.

242 KATHRYN E. SANDERS

Instead, CHIRON’s prototypes are based on general domain knowledge. This

knowledge includes the commonsense meaning of statutory phrases. Terms such

as “principal residence”, although they are underspecified, do have some commonsense

meaning. Additional information is provided by the cases. In any law case,

there are some easy questions that are not at issue. For example, the taxpayer’s

old house may be clearly his principal residence, while the new one is at issue, or

vice versa. The easy questions give some information about the prototypical case.

And hard questions can also provide information. For example, if the issue in a

case is whether a house can qualify as a principal residence if the owner is not

living there, one can infer that actually living in the house is part of the prototype.

Consistent with this approach, it would also be possible to base prototypes on lawyers’

experiences of more typical cases, as suggested in (Schlobohm and McCarty

1989).

CHIRON’s prototypes are templates, or general fact patterns, instantiated for

each case. For example, the prototype rollover plan stored in CHIRON’s knowledge

base refers to a taxpayer selling a house, but the prototype CHIRON uses

in constructing and reasoning about a particular plan involves a specific person and

property. Similarly, in a treatise or regulation, a lawyer would find a generalized

plan, with the details of particular cases to be filled in by the lawyer.

2.2.3. Facts

One of the questions I wanted to explore in CHIRON is what would happen if the

representation of case facts corresponded as closely as possible to the facts in the

case report. Accordingly, CHIRON’s vocabulary includes 75 different predicates.

My goal was to choose an economical set of predicates that would enable the

case representation to capture as much as possible of the statement of facts in the

original case reports, from obviously significant facts such as the purchase or sale

of a house to facts whose importance is not immediately obvious, such as the fact

that the taxpayer was a war veteran, the number of bathrooms in a house, or the

type of floor in a bathroom. Rather than choosing a set of predicates in advance,

I added new predicates as necessary when representing each case. Most facts are

represented explicitly, but a few, such as the fact that a building that is a house is

also real property, are inferred by the system. An example of CHIRON’s predicate

representation is given in Figure 6, and a complete list of predicates is given in

Appendix A.

For purposes of exploration, CHIRON initially included relatively little domain

knowledge about the relative significance of facts. CHIRON has just one simple

assumption: any fact mentioned in a case report must be important with respect to

the strategies involved in the case. This is of course an over-simplification, but does

represent what might happen if a lawyer read a set of cases in a new area, keeping

an open mind at first about the facts. As such, it seemed a useful starting point for

the system.

CHIRON: PLANNING IN AN OPEN-TEXTURED DOMAIN 243

(make-fact

:name ’apartment

:user-name "Apartment"

:supports nil

:compare-fn #’(lambda (f1 f2 strategy)

(cond ((and (equal (modality f1)

(modality f2))

(equal (fact-negations f1)

(fact-negations f2))

(equal (predicate f1)

(predicate f2)))

:match)

(t :unknown))))

Figure 6. CHIRON’s representation of the predicate “apartment”.

Some domain knowledge about the facts is incorporated in the system, however,

and the representation is designed so that more domain knowledge could be added

easily. First, as shown in Figure 6, the predicate representation allows for encoding

domain knowledge about individual facts. If it is known that the presence of a fact

in a case supports the taxpayer’s position with regard to a particular strategy, that

can be encoded in the “:supports” field. In Figure 6, the value of the :supports field

is nil, indicating that nothing is known about the predicate’s significance to any of

the strategies.

Second, the representation allows for encoding domain knowledge about the

relative strengths of two given facts. Every predicate in CHIRON’s vocabulary has

an associated comparison function (“compare-fn”) that is called when comparing

two facts from different cases or prototypes. In Figure 6, the compare-fn takes

two facts and the strategy being considered as arguments and returns either :match

or :unknown. The system has no knowledge about the relative strength of two

facts involving this predicate and makes no distinction based on the strategy being

considered.3 In general, however, the possible return values include :stronger

and :weaker, in addition to those used here. By using the strategy parameter and

the return values :stronger and :weaker, the compare-fn can incorporate domain

knowledge about the relative strengths of the facts with respect to a particular

strategy.

Currently, only one of the predicates uses the :supports field, and only a

few incorporate knowledge about the relative strengths and weaknesses of facts.

The :supports field is used by the predicate “war-veteran”, which supports the

taxpayer’s case for a rollover under the old §1034. The compare-fn for “absence-

3 The compare-fn here indicates that two facts involving the “apartment” predicate are considered

to match if they involve the same predicate, are both positive or both negative, and have the same

modality” (“occurs”, “prohibited”, or “goal”.).

244 KATHRYN E. SANDERS

before-sale”, for example, captures the knowledge that a taxpayer who has not

occupied a house for a year has a stronger case with respect to §121 than someone

who’s been away for five years.

More knowledge of this type could be added without modifying CHIRON’s

design in any way. An interesting direction, though more challenging, would be to

give the system the ability to reason about why a fact might strengthen or weaken

a case with respect to a particular strategy. This would require more fundamental

modifications, however.

2.3. DESIGN DECISIONS

2.3.1. Rules and cases

In order to reason about open-textured rules, cases, and the relationship between

them, CHIRON combines hierarchical and case-based planners in a hybrid system.

Both rules and cases exist in the domain. The rules are not, as in many expert

systems, an artifact created by the system designer. We could translate all the cases

into rules; but there are many rules for which each case could stand. We could

translate all the rules into cases, but each rule corresponds to a set of cases. The

set might be very large, even if it could be defined precisely; and given the open

texture of the rules, specifying the corresponding set of cases would be difficult.

The natural structure of the tax domain is based on rules and cases, and following

that structure makes the system easier to design and maintain.

CHIRON’s case-based and hierarchical planners are equal, interdependent

reasoners. Each cooperates with the other. The hierarchical planner calls the casebased

module for guidance in choosing adaptations and refining the plan to satisfy

the open-textured predicates, and the case-based planner uses the hierarchical

planner to help with indexing, controlling adaptations, and combining plans. This

tightly-coupled architecture exploits our knowledge about the potential interactions

of the case-based and hierarchical planners.

Again, this decision reflects the structure of the domain. In tax, both the rules

and the cases are named. The cases refer to the rules they interpret, and books discussing

the rules are annotated with references to the cases. And the rules and the

cases complement each other. The rules organize cases into groups and partition the

case base; the cases interpret the rules and suggest rules that might be considered.

Suppose the system had a purely rule-dominant design. Then it would refine

the plan as far as possible using rules, and invoke the case-based planner only

when the rules run out. This is comparable to the algorithm used by Gardner’s

legal analysis system (Gardner 1987). As the rule base grows larger and larger,

however, search control – controlling the choice of plan decompositions – becomes

an important issue. The case-based reasoner could suggest search paths for the

hierarchical planner, if it were invoked earlier.

Suppose the system had a case-dominant design. Then the system would retrieve

similar cases first, and apply rules second, if at all. But rules structure the

CHIRON: PLANNING IN AN OPEN-TEXTURED DOMAIN 245

case base. Cases are related to each other by the fact that they interpret the same

rules. Rules also partition the case base. A case-dominant approach fails to take

advantage of this structure.

2.3.2. Open-textured planning

CHIRON’s prototype, cases, and adaptations define a space of possible plans. Any

of the cases in the case base can be obtained by starting with the prototype and

applying the appropriate adaptations. This makes it possible for a variety of different

plans to be generated for the same basic strategy, allowing CHIRON’s plans to

cover a range of possibilities. For example, a house can be the taxpayer’s principal

residence whether he’s lived there for one year or fifty, whether it has one bedroom

or a hundred, and so forth.

This design raises an important question, however: how large should the space

of acceptable plans be? The size of the space is a function of the amount of case

support the system requires a plan to have. The more case support required, the

more plans will be rejected, and the more control will be taken away from the user.

The less case support required, the more dubious plans will be suggested, and the

less helpful the system’s advice will be for the user.

Fairly arbitrarily, I have decided on the following requirements: first, that there

must be at least one most analogous case with the desired result, and second, that

for each fact where the current situation is weaker than the prototype case, there

must be either a favorable case that is at least as weak, or a trend in that direction.

HYPO considers the most analogous, or “most-on-point”, cases to be “[t]he most

analogous cases to a problem situation as determined by relative degrees of overlap

between sets of dimensions shared by cases and problem situation. Measured in

HYPO by claim-lattices” (Ashley 1988, p. 378). CHIRON also determines which

cases are most analogous by constructing a lattice and examining the relative degrees

of overlap between cases; the only difference is that CHIRON uses its case

facts, rather than HYPO’s dimensions, in building the lattice. A case with the desired

result, in this domain, is simply defined as a case that holds for the taxpayer.

There are three things to note about this standard. First, it assumes that it is

possible to argue about the weaknesses in a plan separately. In fact, they may

be cumulative; a plan with several weaknesses, even if there is some support for

each, may be too weak to consider. The system compensates for this possibility by

informing the user about each of the weaknesses; given the information, the user

can decide whether to go ahead.

Second, the system does not attempt to find new creative arguments. For example,

if the taxpayer lived in his house at the time of sale in every §1034 case, the

system would not generate a plan that involves living somewhere else. It would be

interesting to model this kind of creativity, but it is outside the scope of this article.

Third, the system uses the timestamps on the cases. I define “trend” simply as

two cases, one decided earlier than the other, where both decided in favor of the

taxpayer, both were weaker than the prototype along a given dimension, and the

246 KATHRYN E. SANDERS

second was weaker than the first. Taking into account the temporal dimension of

the casebase is rare in CBR systems. Cuthill also uses timestamps: her system,

CHASER, includes a preference for more recent cases in its retrieval algorithm

(Cuthill 1992; Cuthill and McCartney 1993). Reasoning about the time of cases

seems intuitive in legal reasoning systems; it could be useful for any system in a

domain that changes over time.

2.3.3. Detailed fact representation

As described above, CHIRON has a rich, detailed representation for the facts of

its cases. This representation is used in indexing, adaptation, and comparison of

cases. Cases are indexed under all of their facts, so CHIRON can retrieve more

cases than a system that uses a less detailed or more abstract representation. The

system can find more ways to distinguish two cases. And it has a large repertoire of

possible adaptations. Adaptations of the prototype plan are also based on the facts:

some adaptations consist simply of adding a fact to or subtracting a fact from the

prototype; others involve varying the parameters of a given fact. Any fact in one of

the previous cases can potentially be added to the prototype to make a new plan.

CHIRON’s use of the facts is limited, however. It only considers the facts of cases

that involve the current strategy. This results in some loss of reasoning power. If

the system looked at facts first, it would retrieve some cases from other contexts,

which might be useful. For example, when reasoning about §1034, it might also

retrieve cases under §121, where the taxpayer must also establish that he or she has

sold a principal residence.

The loss of reasoning power seems outweighed by the gain in efficiency, however.

Practically speaking, cases interpreting different plans are only useful if there

is no closer match. Legal provisions are context-dependent; their meaning cannot

be assumed to be the same wherever they appear (Gardner 1987, p. 53). In a welldrafted

statute such as the Internal Revenue Code, language is generally used in a

consistent way, and cases interpreting one section are persuasive in arguing about

another, but still, the results are not necessarily the same. I chose, therefore, to see

how far the system could go using only cases from the current context. For interesting

work on “cross-context remindings” in the domain of tort law, see Cuthill

(1992).

2.3.4. Conservative and aggressive plans

CHIRON associates a conservative plan, called the prototype, with each partial plan.

Because the system is operating in an adversarial domain, it is useful to have a safe

interpretation of the rules: a plan that Gardner’s system would accept as an “easy

question”, or what tax planners refer to as a “safe harbor”. If a taxpayer executes

this plan, she will probably be safe from challenge by the government; the more

she differs from it, the more likely she is to be challenged (and to lose). CHIRON’s

prototypes correspond to these safe-harbor plans.

CHIRON: PLANNING IN AN OPEN-TEXTURED DOMAIN 247

It uses the previous cases as guidelines to show how far the prototype can be

adapted. Where the plan differs from the safe-harbor plan, it may be vulnerable to

attack; so in addition to the plan, the system outputs citations to relevant rules and

cases and a discussion of each plan’s strengths and weaknesses, using the model of

legal argumentation developed in Ashley (1991).

CHIRON constructs plans that are as similar to the prototype as possible. This

strategy gives plans a conservative bias, which is consistent with much of tax

planning. It is also consistent with the approach suggested in Kambhampati and

Hendler (1989), that adaptations should in general be conservative.

If a plan is weaker than any of the previous successful cases along some dimension,

the system rejects it, unless there is a trend towards weakening cases

along that dimension. CHIRON could adopt a more aggressive strategy by changing

the facts of the current situation to match weaker pro-taxpayer cases, where the

weakness would be beneficial to the taxpayer. Report-Results does point these

opportunities out to the user, but does not generate plans for them.

Alternatively, CHIRON could adopt an even more conservative strategy by changing

the facts of the current situation to match those of the prototype. For example,

if the taxpayer is not living in a house, CHIRON could suggest that he move in, then

execute the rollover strategy. This change might even make it possible to execute

plans that would be rejected by the current version of CHIRON for lack of support.

Moving into a house and making it his residence would be equally effective if

the taxpayer had been gone for a year (in which case there would be support

for a rollover even without moving back) or ten years (in which case the rollover

strategy would currently be rejected). Many facts cannot be changed, however. If

the taxpayer sold his house five years ago and didn’t buy a second one, he can’t

unsell it and start again. In addition, changing individual facts requires knowledge

about the effect of small changes on the whole plan. It might be, for example, that

in order to move into the house, the taxpayer would have to move six hundred miles

away from his current job, which would mean getting a new job. CHEF-style casebased

planning is based in part on the assumption that the planner doesn’t have that

kind of information about the interactions of parts of a plan; all he has to work with

are entire plans, as executed in the past (Hammond 1986). Instead of making the

changes, then, CHIRON reports the plan’s weaknesses to the user (whether or not

they are grounds for rejecting the plan) and allows the user to decide.

3. Examples

CHIRON solves a cluster of problems having to do with buying, selling, renting,

and owning residential housing. These problems have been chosen in part because

they are simple; most tax planners would agree on at least the obvious solutions. In

addition, they illustrate problems such as timing and satisfaction of open-textured

rules that are typical of the domain. Since they all involve transfers of residential

housing, the commonsense knowledge that must be formalized to handle them

248 KATHRYN E. SANDERS

involves the same cluster of concepts. They also illustrate the problems involved

in reasoning with a dynamic statute: the case base includes cases decided when

the time limit for §1034 rollovers was 18 months and cases decided under a later

version of the statute when the time limit was 24 months; since the system was first

designed, §1034 has been repealed entirely and §121 has been extended to cover

sales formerly covered by §1034.

The examples in this section are excerpts from transcripts, edited to fit within

the margins of an article. Following the usual convention, system output is given

in an easily distinguished typeface.

3.1. CHIRON SOLVES AN EASY PROBLEM

Consider a straightforward example: the taxpayer, whose name is Greenlee, wants

to sell a house. Her tax advisor asks CHIRON for suggestions on how to minimize

tax liability on the sale. She has owned the house, identified by the token 32-

Eleventh-Street, since October 30, 1972, and has occupied the house during that

entire period. She is now forty-two years old. CHIRON takes as input the internal

representation of these facts and the seller’s goals, as follows:

(occurs (individual-return return1) (1994) (1994))

(occurs (taxpayer return1 Greenlee) (1994) (1994))

(occurs (age Greenlee 42) (1994) (1994))

(goal (occurs (selling selling157) ft155 ft156)

Greenlee (9 20 1994) (9 20 1994))

(goal (occurs (seller selling157 Greenlee) ft155 ft156)

Greenlee (9 20 1994) (9 20 1994))

(goal (occurs (object selling157 32-Eleventh-Street)

ft155 ft156) Greenlee (9 20 1994) (9 20 1994))

(occurs (house 32-Eleventh-Street)

(0 0 0) (12 31 99999))

(occurs (physically-occupy Greenlee 32-Eleventh-Street)

(10 30 1972) (9 20 1994))

(occurs (owns Greenlee 32-Eleventh-Street)

(10 30 1972) (9 20 1994))

CHIRON then adds another goal, assumed to be universal to all taxpayers, of

reducing taxes. This goal is instantiated as follows:

(occurs (reduce-taxable-income Greenlee) (1994) (1994))

Next, the Classifier takes the facts of the current situation and applies rules to

determine that the situation involves one type of transaction: a sale of real property

in return for some other unspecified type of property.

CHIRON: PLANNING IN AN OPEN-TEXTURED DOMAIN 249

The current situation involves the following

transaction types:

(:SALE :REAL-PROPERTY :PROPERTY)

The Strategy-Retriever then uses case-guided search to determine which

strategies to consider. First, it retrieves the cases in its case base that also involved

a sale of real property. There are four:

Cases retrieved:

"Welch v. Commissioner, T.C.M. (P-H) 79,010 (1979)".

"Trisko v. Commissioner, 29 T.C. 515 (1957)".

"Sayre v. United States, 163 F.Supp. 495 (S.D.W.Va. 1972)".

"Hughston v. Commissioner, T.C.M.(P-H) 50,188 (1950)".

Among them, these cases involved a total of three strategies: a §121 exclusion,

which permitted a taxpayer who was over 55 years old to sell his or her principal

residence and exclude part of the gain from tax, if he or she met certain tests; a

rollover, where the taxpayer sells one principal residence and buys another; and

a like-kind exchange, where the taxpayer exchanges one piece of property for

another similar one. Accordingly, the Strategy-Retriever returns a list of paths

(i.e., sequences of decomposition rules) that the hierarchical planner can follow

to transform the user’s goals into a partial plan for each of these strategies.

CHIRON now attempts to construct a plan for each of these strategies in the

current situation, starting with the like-kind exchange. First, the Strategy-Processor

calls the hierarchical planner, which constructs an abstract plan, including the

taxpayer’s goals and the general system goal of reducing taxes.

Plans and partial plans are implemented as a task network, represented by a set

of assertions stored in DUCK. Every task has an id, a description, start time, end

time, and type. Task types include :root, :plan-start and :plan-end (for the beginning

and end of the whole plan), :dummy-start and :dummy-end (for the beginning and

end of subplans), :goal, :action, :primitive, and :open-textured. The task network

is partially ordered. Where it is known that one task tsk1 directly precedes another

task tsk2, we assert (pred tsk1 tsk2). The task with no parent is the root; but for

convenience, we also assert (root tskn). Open-textured tasks have associated with

them a code section, identifying the portion of the Internal Revenue Code from

which they are derived; so for open-textured tasks, we assert (code-section sometsk

some-section-number).

The top-level task network is not output as part of the transcript, but internally,

it looks like this:

(task tsk1)

(descr tsk1 (reduce-taxes Greenlee))

(start tsk1 (1 1 0))

(end tsk1 (12 31 99999))

250 KATHRYN E. SANDERS

(type tsk1 :goal)

(task tsk2)

(descr tsk2 (object selling156 32-Eleventh-Street))

(start tsk2 FT154)

(end tsk2 FT155)

(type tsk2 :goal)

(task tsk3)

(descr tsk3 (seller selling156 Greenlee))

(start tsk3 FT154)

(end tsk3 FT155)

(type tsk3 :goal)

(task tsk4)

(descr tsk4 (selling selling 156))

(start tsk4 FT154)

(end tsk4 (FT155)

(type tsk4 :goal)

...

The starting and ending dates for the reduce-taxes task indicate that it is always a

goal, from the earliest to the latest known date. The starting and ending dates for

the other tasks, FT154 and FT155, simply indicate that those tasks have the same

starting and ending times, and that it is some unknown time in the future. There

will also be various other bookkeeping tasks: the starting point of the plan, that is a

predecessor to all of these tasks, the ending point of the plan, to which all of these

tasks are predecessors, and so forth.

After asserting the top-level plan, the hierarchical planner then refines it, using

the sequence of decomposition rules suggested by the Strategy-Retriever. When it

encounters a task of type open-textured, it calls the case-based planner.

The case-based planner then instantiates the prototype corresponding to the

open-textured strategy, adding facts and changing parameters as necessary to fit

the current situation. Next, the case-based planner retrieves all the previous cases

where the taxpayer executed, or attempted to execute the current strategy. For each

such case, if it involves any facts comparable to those in the current situation, the

case-based planner computes a mapping between the facts of the current situation

and those of the previous case. The result of the mapping is a list of pairs of facts

that match, a list of pairs of facts that don’t match but are comparable, a list of

facts that appear only in the previous case, and a list of facts that appear only in the

current situation.

The case-based planner then calls the Argument-Builder module to construct

a subset lattice, storing the current situation at the root, and the prototype and

previous cases at nodes determined by the number of facts they share with the

current situation.

The case-based planner then considers each of the facts where the current situation

is weaker than the prototype, and concludes there is insufficient support for

CHIRON: PLANNING IN AN OPEN-TEXTURED DOMAIN 251

the plan. Because the intended users of the system are experts, however, the system

doesn’t simply continue to the next plan; instead, Report-Results prints out the

reasons why the plan is being rejected, as follows:

*******************************

RESULTS

*******************************

The strategy :LIKE-KIND-EXCHANGE has been rejected for the

following reasons:

(1) The strategy :LIKE-KIND-EXCHANGE is unlikely to succeed

because there is no support for the plan along the dimension

DURATION-OF-OCCUPANCY.

In the current situation:

(OCCURS (DURATION-OF-OCCUPANCY GREENLEE 23-ELEVENTH-STREET

(35 10 20)) (1 1 0) FT155)

*******************************

The taxpayer has been living in her house for many years. The properties involved

in a like-kind exchange must be “held for productive use in a trade or business or

for investment . . . ”. §1031. Personal use of the property weakens the taxpayer’s

case, and there are no cases in CHIRON’s case base with this weakness, so the

system rejects the plan.

The hierarchical planner then backtracks to the top-level plan of selling a house

and reducing taxes. It then continues with the next strategy, the §121 exclusion.

This strategy is also rejected, because the statute set a minimum age of 55 for

taking advantage of the provision, the taxpayer was only 42, and there was no case

support for a lower age.

With regard to the rollover, however, the taxpayer is in a strong position. Her

case is no weaker, and in some respects stronger, than the prototype for this

strategy. As a result, the case-based planner returns to the hierarchical planner

a set of steps that can be substituted for the open-textured plan step. The hierarchical

planner continues refining the plan until all the steps are primitive, and

Report-Results prints out the plan and relevant citations.

*******************************

RESULTS

*******************************

The strategy :ROLLOVER is suggested.

Code sections involved in plan: (1034).

Then Report-Results prints out the plan. The taxpayer is advised to live in the house

until the date of sale, sell it and buy another on the same date, and occupy the new

252 KATHRYN E. SANDERS

house immediately.4 In addition, the taxpayer should have only one residence at

the time of sale.

This is a very conservative plan, but it can be executed by the taxpayer, given

the simple facts of our example. That is, it can be executed from a tax point of view;

the realities of the housing market may make selling more difficult. Note also that

there is nothing in the plan about the value of the original house and the price of

the new house, factors which also enter into a real-world computation of the tax

savings and general desirability of the plan.

Next, Report-Results prints out arguments for and against the plan, generated by

the Argument-Builder from the case lattice. Like HYPO, CHIRON generates threeply

arguments: in other words, its arguments consist of a point, response, and (if

possible) rebuttal. CHIRON makes one of these three-point arguments for each most

analogous case (as defined in Section 2.3.2, above), whether or not the case held

for the government or the taxpayer.

In this case, which raises no real issues, there are no most-on-point cases holding

for the government, and in fact the prototype is the most-on-point case for the

taxpayer.

The taxpayer can cite the following cases for which there

are no most-on-point counter-examples:

"prototype: rollover"

In support of the plan, the system notes its similarities with the prototype. As in the

prototype, Greenlee has bought and occupied a house, and she will (if she executes

this plan) sell a house that she has been occupying until the date of sale. In both

the prototype and the current situation, the taxpayer has one residence at the time

of sale. And she has been living in her house longer than the minimal amount of

time required by the prototype. Finally, the system notes, the time elapsed between

the sale of one house and purchase of another, if Greenlee follows the plan, will

be shorter than that required by the prototype. This point is always followed by a

citation to the most-on-point case in question. For actual cases, the citation is in

correct legal form.

Next, the system prints out a response for the government. It cannot find any

weaknesses in the plan (which is indeed quite standard), but it does find a case,

Welch v. Commissioner, T.C.M. (P-H) 79,010 (1979), in which the government

won even though in some respects, the taxpayer’s plan was even stronger than the

prototype.

In Welch, the system points out, the government won even though the taxpayer

had occupied his first residence for seven years, longer than the prototype requires,

4 The advice to move immediately results from a lack of subtlety in CHIRON’s knowledge base.

It knows that sooner is better, so it assumes that moving immediately is the safest possible plan. In

fact, sooner is better only if you miss the statutory time limit; within the time limit, it doesn’t make

a difference.

CHIRON: PLANNING IN AN OPEN-TEXTURED DOMAIN 253

bought a new piece of property only ten months and 22 days after the sale of his

old residence, and occupied the new property a year, eight months, and two days

after the sale, both less than the two-year interval allowed by the prototype.

Since the government has cited a new case in response, the taxpayer offers a rebuttal.

The best rebuttal here would be that Welch was decided under an old version

of the statute. In the time period covered by this case, the statutory time limit was

eighteen months. Because the taxpayer’s house was not completed within the time

limit, he was unable to occupy it until two months afterwards. The prototype case,

on the other hand, is within the current two-year time limit.

CHIRON has no means of reasoning about the dynamic nature of statutes, however,

so it must look for other distinctions. It notes that the type of property involved

in the two cases is different (the current situation involves selling a house; Welch

just involved some unspecified real property); Welch involved a rental, while the

current situation does not (the taxpayer in Welch temporarily rented a residence

while his new house was being built); and the suggested plan is stronger than

Welch with respect to three key facts: the time between sale of the old residence and

purchase of a new one, the time between sale of the old residence and occupancy

of the new one, and the length of the time during which the taxpayer had occupied

the old residence.

CHIRON has almost no domain knowledge about which distinctions are important,

so it considers them all. CHIRON’s first two arguments are not compelling: the

property types involved in the two situations are not significantly different, and the

fact that the taxpayer in Welch temporarily rented a residence while his new house

was being built should not disqualify him.

The third argument is a strong one, however. The current plan is stronger than

Welch along exactly the dimensions that the government had cited in comparing

Welch to the prototype. Thus, even though the system assumes that all its cases are

decided under the same version of the statute, it provides strong support for the

right conclusion.

The system has now considered all the strategies recommended by the caseguided

search mechanism and recommended one of them. It reminds the user

which strategy was successful, and offers the user a chance to consider other

possibilities. From here on, the user can request any strategy or combination of

strategies he or she would like the system to consider. Requests are processed in a

similar manner, except that when called by the Combiner, instead of backtracking,

the hierarchical planner constructs a plan for the first strategy and then attempts to

add steps to achieve each additional strategy. The final decision on which of these

plans to execute, if any, is left to Ms. Greenlee and her tax advisor.

3.2. CHIRON REJECTS THE SAME PLAN GIVEN WEAKER FACTS

Suppose the input facts are the same as the first example, except that the taxpayer

has already sold her house, the sale occurred four years ago, and she has not yet

254 KATHRYN E. SANDERS

bought a new residence. Since this example also involves a sale of real property,

CHIRON considers the same three strategies as in the first example. Like-kind exchange

is rejected for the same reason as in the first example, because the taxpayer

has occupied the property; and again, the taxpayer is too young to take advantage

of the §121 exclusion. Report-Results also notes two other reasons for rejecting the

§121 exclusion in this case are that the taxpayer only occupied the house during

one of the five years prior to the sale, and that she was away from home for the four

years immediately prior to the sale.

The rollover strategy is also rejected. In the first example, the taxpayer was

occupying the house at the time of sale; here, the taxpayer had not been occupying

the house for four years before the sale. The only case in the case base where the

taxpayer was away from home at the time of sale, Trisko v. Commissioner, 29 T.C.

515 (1957), involved an absence of only three years; this case is even weaker than

Trisko, so the plan is rejected.

3.3. CHIRON RECOMMENDS A PLAN IN SPITE OF WEAKNESSES

Now suppose the input facts are that the taxpayer has been away from home one

year instead of three. Again, CHIRON considers like-kind exchange, rollover, and

the §121 exclusion, and again rejects the like-kind exchange and the exclusion.

Despite the fact that the taxpayer had not lived in the house for a year before the

sale, the system recommends a rollover.

*****************************************************

RESULTS

*****************************************************

The strategy :ROLLOVER is suggested.

Code sections involved in plan: (1034).

CHIRON suggests that the taxpayer buy and occupy another house. It notes that

the taxpayer lived in her house for three years, two months, and twenty-one days

before selling it, and that she had only one residence on the date of sale.

*******************************************

PLAN

*******************************************

((OCCURS (ABSENCE-BEFORE-SALE GREENLEE SELLING163

(1 0 0)) (9 15 1993) (9 15 1993)))

((OCCURS (NUMBER-OF-RESIDENCES GREENLEE 1)

(9 15 1993) (9 15 1993)))

((OCCURS (DURATION-OF-OCCUPANCY GREENLEE 32-ELEVENTH-STREET

(3 2 21)) (1 1 0) (9 15 1993)))

CHIRON: PLANNING IN AN OPEN-TEXTURED DOMAIN 255

((OCCURS (BUYER SELLING541 GREENLEE) FT539 FT540))

((OCCURS (PHYSICALLY-OCCUPY GREENLEE UNKNOWN-HOUSE538)

FT536 FT537))

((OCCURS (SALE-TO-PURCHASE-TIME SELLING163 SELLING541

(1 0 7)) (9 15 1993) FT539))

((OCCURS (SALE-TO-OCCUPANCY-TIME SELLING163 SELLING541

(1 0 7)) (9 15 1993) FT536))

((OCCURS (SELLING SELLING541) FT539 FT540))

((OCCURS (OBJECT SELLING541 UNKNOWN-HOUSE538)

FT539 FT540))

*******************************************

Optimistically, the system assumes that the new purchase will occur exactly a

year and seven days after the sale, that is, the day the example was run. We would

need more knowledge about how long it actually takes to buy a house to make

a more accurate guess. If both sale and purchase are in the future, this is not a

problem; and if one of them occurred more than two years ago, the system will

note a weakness in the plan, as it should. For sales that occurred within the past

two years, and particularly over a year ago (so that meeting the time limit may

be impossible), we would like to be able to say “Buy another house within two

years”, and express the fact that the sale-to-purchase time will be between one and

two years, but that would require more sophisticated temporal reasoning than the

system is yet capable of.

Next, CHIRON prints out arguments for and against the success of the suggested

plan. As in the first example, the prototype rollover plan is the only most-on-point

case. The system argues (on behalf of the taxpayer) that the current plan should

succeed like the prototype, because of the facts they have in common.

In response, on behalf of the government, the system admits that the current

situation and the prototype contain the same transactions (two sales of real property

and purchases of real property), but notes that the current situation is weaker than

the prototype, in that the taxpayer, if she executes the suggested plan, would not be

occupying the house at the time of sale.

(4) Weaknesses of the taxpayer’s case compared with

"the rollover prototype":

"the rollover prototype" is distinguishable because

it is stronger for the taxpayer than the current situation

along the shared features:

Current situation:

(OCCURS (ABSENCE-BEFORE-SALE GREENLEE SELLING163

(1 0 0)) (9 15 1993) (9 15 1993))

"the rollover prototype":

256 KATHRYN E. SANDERS

(OCCURS (ABSENCE-BEFORE-SALE GREENLEE SELLING163

(0 0 0)) UT555 UT555)

Next, as in the first example above, CHIRON makes an argument based on Welch

on behalf of the government and rebuts it on behalf of the taxpayer by noting the

differences in transactions. In the first example, the suggested plan was stronger

than Welch along all three of the dimensions where Welch was stronger than the

prototype; here, the suggested plan is stronger than Welch only on one of those

dimensions, sale-to-occupancy-time.

(4) Strengths of the taxpayer’s case compared with "Welch":

"Welch" is distinguishable because

it is stronger for the government than the current situation

along the shared features:

Current situation:

(OCCURS (SALE-TO-OCCUPANCY-TIME SELLING163 SELLING541

(1 0 7)) (9 15 1993) FT536)

"Welch":

(OCCURS (SALE-TO-OCCUPANCY-TIME SELLING1 SELLING2

(1 8 2)) (SEPTEMBER 11 1972) (MAY 13 1974))

Finally, CHIRON warns the user that the suggested plan is weaker than the

prototype.

The current situation is weaker than the prototype

in some respects. There is some support for each

of these weaknesses, however:

(1) The current situation is weaker than the

prototype along the dimension ABSENCE-BEFORE-SALE. In the

current situation

(OCCURS (ABSENCE-BEFORE-SALE GREENLEE SELLING163

(1 0 0)) (9 15 1993) (9 15 1993))

However, the taxpayer has won in the following

cases with a weaker position:

Case: "Trisko v. Commissioner, 29 T.C. 515 (1957)"

Position:

(OCCURS (ABSENCE-BEFORE-SALE TRISKO SELLING1

(3 8 0)) (JUNE 1941) (OCTOBER 10 1951))

*****************************************************

In other words, the system notes that the fact that the taxpayer was not living in

the house at the time of sale raises an issue with respect to this strategy, but there is

case support for that weakness, and gives the user a citation to the supporting case.

CHIRON: PLANNING IN AN OPEN-TEXTURED DOMAIN 257

3.4. CHIRON FINDS MORE THAN ONE PLAN TO RECOMMEND

If we change the facts so that the taxpayer qualifies for more than one plan, CHIRON

will recommend both, but may not recommend the combination. For example, if the

input facts are the same as the first example, but the taxpayer is over 55 at the time

she sells her house, CHIRON again rejects the like-kind exchange and recommends

the rollover, for the same reasons as in the first example. The fact that the taxpayer

is older makes no difference to these plans.

Although the new plan is very similar to the §121 prototype, surprisingly, the

system finds most-on-point cases for both sides. For the taxpayer, it finds the

prototype; for the government, a Revenue Ruling (Rev. Rul. 88-29, 1988-1 C.B.

75). Revenue Rulings are cases decided by the Internal Revenue Service after an

administrative hearing. They do not have the precedential effect of a court case,

but they are indicative of the IRS’s position. If they hold in favor of the taxpayer,

they provide useful support. If not, they suggest issues the taxpayer may need to

address.

CHIRON bases its argument on the fact that, in this ruling, the taxpayer won

even though the taxpayer was older, and had owned the property sold longer, than

required by the prototype. The ruling involved a taxpayer in New York City who

sold his rights to a rent-controlled apartment to his landlord and wanted to take the

§121 exclusion for part of the (apparently sizeable) payment, arguing that he had

sold his principal residence. He was sixty years old at the time of sale and still living

in the apartment, where he had lived for 25 years. He had no other residence. The

IRS took the position that these rights, no matter how valuable, were not the kind

of ownership rights required by the statute, and it rejected the taxpayer’s claim.

In rebuttal, CHIRON identifies exactly the right distinction between the current

situation and the Revenue Ruling: they involve the sale of different types of property.

In the current situation, the taxpayer is selling a piece of real property; in the

Revenue Ruling the taxpayer sold intangible rights. This is precisely the rationale

given by the IRS for its decision. Incidentally, this is also the reason why the

Revenue Ruling does not turn up during case-guided search: unlike the current

situation, it does not involve a sale of real estate.

If requested, CHIRON does succeed in constructing a plan that combines both

of these strategies, given these input facts. The system does caution, however, that

there are no cases in the case base where the combination succeeded, and one

(Welch), where it failed.

Here CHIRON is too cautious. If there were several negative cases, the government

might have a strong argument. For example, there are a number of cases

where the taxpayer claims deductions on the grounds that he was away from home

on business, and also claims moving expenses for the return trip. (See, e.g., Goldman

v. Commissioner, 497 F.2d 382 (6th Cir. 1974); Rev. Rul. 74-242, 1974-1

C.B. 69; and Schweighardt v. Commissioner, 54 T.C. 1273 (1970)). In general,

this combination always loses. The combination of rollover and §121, on the other

258 KATHRYN E. SANDERS

hand, was not at all unusual. An elderly taxpayer who wants to sell her house

and move to a smaller place might well have chosen to take advantage of both

strategies.

3.5. CHIRON FAILS TO RECOMMEND A PLAN THAT IT SHOULD RECOMMEND,

AND WHY IT FAILS

To illustrate yet further the problems with changes in the statute, as input, I gave

CHIRON as input the facts of a case, Welch, where the taxpayer lost under an

old version of §1034. Just as in the earlier case, the taxpayer sells a residence

in Minneapolis that she had been occupying for 7 years, buys some land, builds

a new house, and occupies the new house twenty months after the sale of the old

residence. In the meanwhile, like the taxpayer in Welch, she rents a place to live.

To simplify the example, we make one minor change: the taxpayer is 42 and so,

unlike the earlier taxpayer, too young to qualify for the §121 exclusion. This way

the system does not consider the §121 exclusion, and it also rejects the like-kind

exchange on the grounds that the taxpayer has been occupying the property.

A rollover should succeed on these facts; they are no weaker than the prototype,

and under current law they seem quite unproblematic; but CHIRON rejects

the rollover strategy as well. The system correctly identifies Welch as the most-onpoint

case. It would be difficult for any other case to be more on point, since, except

for the taxpayer’s age and the dates, the facts are the same. Because the taxpayer

lost in Welch, the system concludes, the taxpayer will lose in the current situation

as well.

In order to solve this problem correctly, CHIRON would need some way of

reasoning about the dynamic nature of statutes. Welch is still useful as a precedent;

it can be cited, for example, for the proposition that the statutory time limit is

fixed and cannot be stretched. It cannot be cited, as it is here, for the proposition

that a twenty-month delay exceeds the time limit. To capture this aspect of the

relationship between rules and cases, statutes, as well as cases, would need to be

time-stamped, and even then, it would be hard to distinguish between those aspects

of a case that are no longer meaningful and those that are still relevant to the revised

version of the statute. This remains a difficult, but interesting problem for future

work.

4. Related Work

There are no completely “on-point” systems: that is, no other open-textured legal

planners. Nevertheless, CHIRON owes a great deal to previous work. The system’s

method of reasoning about open-textured rules combines ideas from several previous

projects: prototypes from (Bareiss 1988); prototypes and deformations from

(McCarty 1980, 1989a, Schlobohm and McCarty 1989); the use of a set of cases

from (Gardner 1987); the use of cases with concrete facts related by dimensions

CHIRON: PLANNING IN AN OPEN-TEXTURED DOMAIN 259

(corporation Chrysler t1)

(issue Chrysler s1 t1)

(stock s1 t1)

(common s1 t1)

(piece-of p1 s1 t1)

(nshares p1 100 t1)

(own Iacocca p1 t1)

Figure 7. How TAXMAN would represent “Iacocca owns 100 shares of Chrysler stock”.

(occurs (corporation Chrysler) t1 t2)

(occurs (issue Chrysler s1) t1 t2)

(occurs (stock s1) t1 t2)

(occurs (common s1) t1 t2)

(occurs (financial-part p1 s1) t1 t2)

(occurs (number-of-shares p1 100) t1 t2)

(occurs (owns Iacocca p1) t1 t2)

Figure 8. How CHIRON would represent “Iacocca owns 100 shares of Chrysler stock”.

from (Ashley 1991; Rissland and Skalak 1989a, b, c; Skalak 1989a, b; Skalak and

Rissland 1992; Rissland et al. 1994); and the use of cases with a rich, detailed

representation from Branting (1990a).

CHIRON’s fact representation language is strongly influenced by TAXMAN (Mc-

Carty 1977) and TAXMAN II (McCarty 1980; McCarty and Sridharan 1982). For

TAXMAN, McCarty designed a representation language that was sufficiently expressive

to state the facts of an input case in detail, yet based on a economical set

of predicates. For example, see how TAXMAN would represent “Iacocca owns 100

shares of Chrysler stock” (Figure 7.) In TAXMAN II, McCarty developed a deontic

logic for representing the concepts of permissions and obligations that occur on

the legal domain. The representation language CHIRON uses for case facts and

useful abstractions from those facts is a modal temporal logic with a formal syntax

and semantics, an extension of the temporal logic developed by Shoham (1988),

modified to incorporate the modal operators “know”, “believe”, “want” (or “goal”),

obligated”, “permitted”, and “prohibited”. In designing this language, I aimed for

the economy and flexibility of McCarty’s languages.

For purposes of comparison, CHIRON’s representation of the same facts is given

in Figure 8. Aside from the use of “occurs”, the fact that CHIRON’s dates have

starting and ending points (useful when computing duration) and minor variations

in vocabulary such as the use of “owns” rather than “own”, this representation is

very similar to TAXMAN’s.

CHIRON’s hierarchical planner is adapted from a version of Nonlin implemented

in Common Lisp at the University of Maryland (Ghosh et al. 1991). CHIRON’s de-

260 KATHRYN E. SANDERS

composition rules are represented in the same way as Nonlin’s schemas, except that

CHIRON’s slot “steps” is called “expansion" in Nonlin. CHIRON retains the basic

flow of control and architecture of the Maryland Nonlin, but stores most of its data,

including the tasknet, in DUCK, a deductive retriever written at Yale (McDermott

1985). DUCK allows the user to store and retrieve facts, and it supports forward and

backward-chaining. DUCK also provides a clean backtracking mechanism. DUCK

allows the user to create independent but related local databases, known as “datapools”.

Instead of revising a variety of data structures, as the original Maryland

Nonlin did, CHIRON simply establishes a new datapool at each choice point and

when backtracking, pops the most recent datapool off the stack.

In addition, the Maryland Nonlin’s design is modified in two ways to incorporate

the case-based planner: first, the case-based planner is called to help in the

choice of decompositions; and second, the case-based planner is called to suggest

decompositions for certain “open-textured” tasks.

CHIRON incorporates an argument-generation model based on HYPO’s (Ashley

1991). As in HYPO, arguments are based on comparing and contrasting cases using

a subset lattice, although CHIRON uses case facts as the basis for the lattice, where

HYPO uses dimensions. HYPO introduced dimensions as structured objects able

to represent a variety of factors (i.e., stereotypical patterns of facts that tend to

strengthen or weaken a legal conclusion) with different kinds of ranges, binary,

ordered sequences, etc. CHIRON was designed to explore what happens if the case

facts are used for comparison, but a few of its predicates do incorporate domain

knowledge about facts that strengthen or weaken a legal conclusion, and those are

very similar to HYPO’s dimensions.

CHIRON extends HYPO’s model of argumentation slightly by constructing arguments

about proposed strategy combinations, as well as combinations of facts. A

more significant extension is the application of HYPO-style arguments to planning.

Both HYPO and CABARET, the systems that implemented this kind of argumentation

before CHIRON, are legal analysis systems. That is, they take the role of a

trial lawyer, examining the facts of a past situation and building arguments for and

against a particular legal result in that situation. CHIRON is a planner, considering

facts some of which may be past and some are still in the future.

HYPO does not use prototypes, so there is no comparison of the current situation

to a typical one. This is partly necessitated by the difference between their tasks:

since HYPO is taking the role of a trial lawyer, analyzing the facts of a completed

case, the case description can be assumed to be complete. In CHIRON, some of the

facts may be given, but others will be open, so there is a use for the default values

provided by a prototype.

HYPO does, as its name indicates, generate hypothetical cases to explore how

modifications of the facts might change the system’s arguments. To generate hypotheticals,

the system uses a seed case, either the current situation or another

case. This is similar to planning, in that it generates possible cases, but it is more

open-ended. Such a facility might be a very interesting addition to a planner.

CHIRON: PLANNING IN AN OPEN-TEXTURED DOMAIN 261

CABARET (Rissland and Skalak 1989a, b, c; Skalak 1989a, b) also used two

equal modules. In that system, however, all the control knowledge was isolated

in a separate control module. For CABARET’s implementation in the tax domain,

its two modules were rule-based and case-based reasoners, but the system was

designed to work with various types of modules, including case-based, rule-based,

and model-based reasoners.

PROLEXS (Oskamp et al. 1989), a legal expert system in the domain of Dutch

landlord-tenant law, also combines rules and cases in a blackboard architecture.

Unlike the other projects described in this section, PROLEXS was designed as a

practical system. It was intended to be used by a law student advising clients in a

legal-aid clinic, and a prototype of the system has been tested in that context. As in

CABARET, there are distinct reasoners for different types of legal knowledge, with

control knowledge isolated in a separate module. Since PROLEXS is based on civil

law, however, its “cases” seem more like rules and are applied like rules, being

used if relevant rather than being compared and contrasted with each other.

In planning, the two lines of work that are most closely related to CHIRON

are hierarchical, nonlinear planning (Sacerdoti 1974, Tate 1976, Tate 1977) and

case-based planning (Hanks and Weld 1992; McCartney and Wurst 1991; Hinrichs

1991; Kambhampati and Hendler 1989; Hammond 1986; Alterman 1986). Hierarchical

planning provides a way of reasoning with the rules on which plans are

based, but is insufficient in this domain, since schemas based on legal rules “run

out”: the most concrete partial plans that can be generated by the planner still contain

one or more abstract, nonexecutable steps, corresponding to the open-textured

provisions of the rules. Case-based planning is also insufficient: it provides a way of

reasoning with legal cases and clarifies many of the issues involved in case representation,

indexing, and adaptation, but does not capture the way that rules structure

and organize the case base. In CHIRON, the hierarchical planner reasons with representations

of open-textured rules and facts; the case-based planner bridges the

gap between the two, as legal cases bridge the gap between open-textured rules

and facts.

CHIRON’s case-guided search is similar to the case-guided search used in (Veloso

1992; Kambhampati and Hendler 1989), except that in CHIRON, cases are used

as the basis for a solution to the current problem, as well as for search control. In the

context of this project, Kambhampati and Hendler suggested a general criterion for

adaptations: that efficient adaptation strategies (which they call “refitting”) should

be conservative: they should change the old plan only as much as necessary to fit

it to the new situation (Kambhampati and Hendler 1989). This is similar to the

conservative bias found in CHIRON.

Finally, CHIRON also shares many ideas with the design for a legal planning

system sketched out by McCarty in joint work with Dean Schlobohm, an estate

planning attorney (Schlobohm and McCarty 1989). They argue that lawyers

construct plans by retrieving prototype plans and transforming them to meet the

clients’ goals. They discuss how trusts and the Internal Revenue Code can be

262 KATHRYN E. SANDERS

represented using McCarty’s representation language. Unlike CHIRON’s design,

this design does not incorporate any explicit facility for reasoning with cases.

5. Conclusions

What has been learned so far from this project? One way to reflect on this question

is to consider what it would take to reimplement the system in a new domain.

Suppose, for example, we wanted CHIRON to construct plans in the bankruptcy

domain explored in BankXX (Rissland et al. 1994). United States law offers individuals

two means of declaring bankruptcy. Roughly speaking, in the first type

of bankruptcy, the debtor is required to liquidate all of his or her property; in

the second type, known as Chapter 13 bankruptcy after the portion of the law

where it is defined, the debtor proposes a plan to pay over a period of 3–5 years.

BankXX uses heuristics and best-first search, in addition to HYPO-style case-based

techniques, to gather cases, legal theories, stereotypical legal stories, etc. on the

question of whether Chapter 13 personal bankruptcy plans are “proposed in good

faith” (Rissland et al. 1994).

The new bankruptcy CHIRON (BankCH) would have the same basic design and

flow of control as CHIRON. The major change would be in the knowledge base,

and the major task involved in re-implementation would be knowledge acquisition.

Much of CHIRON’s vocabulary concerning property ownership, sales, income, and

debts, could be reused in this domain. It would be necessary to revise the toplevel

goal (currently reduce-taxes), analyze the bankruptcy law to determine which

aspects of the cases to use in case-guided search, and build the domain-knowledge

module about which features and dimensions strengthen or weaken a case (though

here we could build on some of the work already done for BankXX).

One of the lessons learned in building CHIRON, although not a new or surprising

lesson, is that a richer knowledge representation has both advantages and disadvantages.

CHIRON’s algorithms for indexing, adapting, comparing, and contrasting

cases benefit from its rich fact representation. For example, it was able to distinguish

cases involving the sale of a house and the sale of rights to a rent-controlled

apartment on the basis that the latter involves a sale of intangible property rights.

However, the detailed case representation makes knowledge acquisition timeconsuming

and difficult. CHIRON’s 24 cases took several hours apiece to represent

by hand, and BankCH’s cases would be comparable. Representing the rules and

domain knowledge take a substantial amount of time as well. A feature-vector representation

makes it easier to translate from case report to representation. Second,

a richer representation language makes it harder to enforce consistency in the case

representations.

A detailed, flexible case representation significantly increases the computational

cost of matching cases. It remains simpler than full subgraph isomorphism (which

is NP-complete (Garey and Johnson 1979)), but still more complex than the cost of

comparing feature-vector-based cases. However, CHIRON’s response times (typic-

CHIRON: PLANNING IN AN OPEN-TEXTURED DOMAIN 263

ally three to five minutes per problem) are tolerable and, as reported in (Sanders et

al. 1997), preliminary results using a synthetic casebase indicate that representing

structured cases on a parallel machine significantly improves the time required for

matching and reasoning with structured cases.

This project illustrates the difficulty of reasoning with cases and rules in a domain

where both are changing. When the statute changes, some aspects of previous

case law may remain relevant, but others do not. The system would benefit from an

ability to reason about dynamic legal systems; but that, as noted by both Gardner

(1989) and Bratley et al. (1991), is a general problem with legal reasoning systems.

Finally, the project illustrates a way of constructing plans from representations

of rules and cases, where the cases extend, limit, and partially define the rules, the

system distinguishes between conservative and aggressive plans, and considerable

control is given to the expert user.

Acknowledgements

The author gratefully acknowledges the criticisms and encouragement of Eugene

Charniak, Tom Dean, Jim Hendler, Leslie Kaelbling, Robert McCartney, Leora

Morgenstern, Edwina Rissland, David Skalak, and the members of the PLUS

group at the University of Maryland. The reviewers’ comments were thorough,

thought-provoking and helpful. This project was part of my thesis work, which was

supported in part by National Science Foundation Presidential Young Investigator

Award IRI-8957601 to Thomas Dean, by the Air Force and the Advanced Research

Projects Agency of the Department of Defense under Contract No. F30602-91-C-

0041, by the Office of Naval Research and the Advanced Research Projects Agency

under grant ONR N00014-91-J-4052, ARPA Order 8225, by the National Science

Foundation in conjunction with the Advanced Research Projects Agency of the Department

of Defense under Contract No. IRI-8905436, by IBM grants 17290066,

17291066, 17292066, and 17293066, and by National Science Foundation grant

IRI-8801253.

264 KATHRYN E. SANDERS

Appendix

A. CHIRON’s predicates

absence-before-sale age

apartment area

bank bathroom

building buyer

car cash

condominium cooperative

corporation distance

dormitory duration-of-occupancy

duration-of-ownership duration-of-rental

121-elections-before-sale elementary-school

employment employer

employee farm

files financial-part

floortype government

half-bath house

individual individual-return

intangible-personal-property joint-return

kitchen labor

laboratory lawyer

lessee lessor

location maintain

near number-of-bathrooms

number-of-residences object

121-occupancy-time 121-ownership-time

older owns

parent payment

physically-occupy private-school

public-school real-property

rent-controlled renting

research room

sale-to-occupancy-time sale-to-purchase-time

seller selling

services signs

spatial-part student

tangible-personal-property tax-exempt

taxpayer tenants-rights

trailer university

war-veteran

CHIRON: PLANNING IN AN OPEN-TEXTURED DOMAIN 265

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