the conflict arises with respect to the question of whether an alleged were statement of cost or basis in connection with the sale property constitutes in a mission from gross income it gives the government and edition of three respect to the first issue the trial court here failed to give effect to the critical were opened it in the statute and this is in direct conflict with the supreme court's conclusion in column e game versus commissioner that the purpose underlying the statutory language was limited to giving the iris the extended time he says we're because of the taxpayers bill mission to report some taxable item the i statute in history how is the kind of error that occurred here again we have to assume for purposes of this discussion it was an error how is that reflected on the return of the the here are the under ell how it was a possible error in basis apparent just just from the fact that there's a reporting of of what the base was and then the transaction and from that the i r s has put on  notice that that's correct your honor and the reporting does say whether it be a sale of inventory or a sale of assets used in a trade or business or businesses here you have a group selling price that is reported on the return and you have the colony in the case of the supreme court reviewed the taxpayer has in fact not only did an item from its return or the actual basis it is a result of maybe a number of calculations of cost of goods so on the return you also identified the basis that you are a cert on that's all that's required to be on return that would be all the colony reported in the colony case the court determined actually i think that the tax court overstatement basis even though it may affect the calculation of gross income is not you know mission from gross income within the meaning of the statute the same words that continue to be in the statute today so the court in that case basically said  and i think the analogy that the court made been using was if you overstated your deductions and got a higher value of taxable income or a higher amount of taxable income or overstated other calculations though there was no omission the sale of the ranch is clearly shown return in fact the sale of the range is by far the largest single income i don't show no return so even if you just picked up the returning glance you would be very clear that there was a sale direct and the amount of the proceeds resulting from the sale of rent or clearly show returns up as was the case in holland the taxpayer if you will even though it has an impact on gross income and the court in colonie acknowledged that the overstatement of basis would result in an understatement gross and even though there is an impact on gross income that kind of an i'm sorry and and as as as a ruth important thing the statute of limitations the twenty five percent rule will simply measure the congress chose to say we want to identify get past your mission then you have to calculate whether the omission if it exists does represent more than twenty five percent of the gross income stated in the return we do not believe that we that the transactions here would meet that test either reported the frass it would be zero basically it would be zero percent that was it was not reported so we don't believe that we don't we also only the court has to get to that issue because we believe that the situation where you would ever have and a mission because you you're going to have the sale price you're going to have the debate and if you're saying that both of those items are the pretty much happier than ordered to have any calculation at all where would be omission come in but the again if the transaction is reported accurately reported in terms of the nature of the transaction o reported but it was mischaracterized i believe it was described as being from the sale stock but in fact it was a payment of installer player and so in any case the ira the courts determine because you mischaracterized the nature of the transaction you form it that transaction to place the ira at the same disadvantage but where you have in fact reported the transaction identified the total gross receipts that the teaching of colony is that that is not in a which because the item is on the return or the eye rest has the usual three years in which to identify it to ask questions about the follow up on it and if it doesn't do so in that period of time the court found that congress didn't intend to then extend the statute by another three years where the taxpayer is in fact identify the import of the transaction on the  we have here and then defines gross income to mean gross receipts in the case of the sale of goods or in the case of sales of goods or services and the term goods or services as we've discussed in the brief is not defined there difficult to find a exception they are all son of boss cases in which in which this case it is which is an attempt to artificially inflate the basis of assets in order to create an artificial loss or basis in the property that was sold and it's our position also that colony first of all supports supports our position and several several respects first of all colony was decided under the nineteen thirty nine revenue code the court itself in several places reflects the difference between the thirty nine code and the fifty four  read out the sale of goods and services becomes under the appellant's construction every single asset of a business is goods or services regardless of whether it's actually something like a widget that's manufactured income in the case of trades or business as it also said that it was demanding existing law so if congress redefines gross income in the case of a traitor business obviously the definition of a trade or business for purpose of group thing come for purposes of a trade or business is different than it is for everything else or congress would have no need to redefine it so it's our colony it's actually distinguishable not only because colony seems to involve basically a winch and case the company was in the business of selling you know what's in the ordinary course of the business so in that case the lot was not a branch used in the business it was actually what they did and furthermore in that case the development expens reported anywhere i thought that it was reported well here we have the short sale we have the short sale transactions that we it's our future in terms of adequate disclosure you look to the cleared i think it was a small profit on that but that was that was stated was it not that wasn't concealed i'm trying to understand the reasoning wh i asked you before that was so muddled you said they didn't pay enough tax i don't believe that the statute says that you should not omit item use the sale of goods and services and so on is talking about the bottom line after you calculate whether or not you know i had it was were declared i'm trying to understand where you believe they should have reported the concept of now using the short sale as the basis for the ultimate sale of the wreckage well it's our position that it should have been recorded on a partner return but even if this court considers the partnership return to be relevant it should have been reported there and it might meet me it was easier if i would explain what was going on here basically they sold the i think we understand that that was a owner of the prius i'm trying to understand the technical application colony and the statute and what you think should have been done should they according to the government have written a letter saying look what i do get to increase my basis they should have included an attachment to the amount of the limited i know the case of brandon ridge versus united states which is one of the one of the four cases on this issue had all of that in order to adequately disclose  our position what he was required to do is to attach a statement to the return saying the basis the basis of the property that was sold includes proceeds of a short sale that were transferred to the poor partnership it does it acts clunes the offsetting obligation to close the short sale because that is the taxpayers position that the obligation to close the short sale is the contingent obligation under section seven fifty two of the code and therefore it does not reduce the tax payer space if the taxpayer it doesn't and not he would have he would have provided us with adequate disclosure and three years statute of limitations would be applicable that essentially it's what the district court set out in the case of brandon ridge partners for us this united states and we feel  meanwhile the partners are generally separated from the partnerships by this family limited partnership which now owns ninety two and a half percent of the interest in cmin ranch so this intermediary of the only limited partnership claim how the basis was that all affected by the short sale transaction and it's not really been apparent from their return that they were partners in a partnership because they're not required to attach  be returned that correct well it's not then which returns would have been the one that would have provided the disclosure that your thing should have been provided to avoid the statue limitations it's our position that the relevant return to claims and there are other cases in the court of credit quality of the various tax court decisions we've seen but is there any regional circuit cases that have decided this i know there's reference to this question in the first of going up but there's no circuit decisions now so presumably this decision and the decision of the ninth circuit will be the first circuit decision squarely addressing this that's correct points very quickly one is that i think we covered this in the brief but the the argument is made and was referred to about it from court in the decision that sub sub paragraph i section sixty five o case secondly and i just mention this in passing but the reference to the type of transaction that was involved here in the other cases that are pending there are other statute of limitation extensions that apply to this one said its decision its conclusion was in harmony with the new statute and both the government in its argument in i believe the trial court here basically took that to mean that