provide for the income from discharge of indebtedness also requires that if a tax payer is insolvent it's not elective rather it is required that th does the taxpayers liabilities exceed their assets at the time of discharge unfortunately section ten weight doesn't go into a lot of detail about the definitions of those two terms right doesn't define what an asset is it doesn't define what a liability is during the examination stage of this one of those terms you know those terms in the revenue in the tax con con tax are particularly unknowable i mean they have traditional definitions true i wonder if it looks like a three hundred thousand dollars or so asset part of a business partnership distribution was was given to the taxpayers or was acquired by the taxpayer and then transferred into and the stipulation of facts does specify that because of the sleep prescription drug abuse transferred his wife transferred those assets to his son to basically protect protect him because he was engaging in erratic spending behavior it's a sensitive situation not not one that they've wanted to you know put before everyone but right but but is hamilton then had access to yet her son's personal account and was able to access and use those funds and did in fact access and use those funds correct yes so so mr hamilton was the one that acquired those funds initially and they were put into a joint account husband and wife are separate taxpayers they are also in under the laws of the state of utah they have separate debts they own separate property and mrs hamilton acquired a right to those assets by them being deposited in a joint account and she was able to pull those funds away from vincent and they were transferred does it matter that they were used to pay family expenses to pay the mortgage and the joint obligations that mr and mrs hampton i the tax court certainly felt and said in its ruling that we the taxpayer didn't show that and wasn't there not and so there the tax court did did place emphasis on that i think that it stipulated in fact that the ownership of that account was andrews you know he owned that and so the trailer he never used it did he for this entire tax year he didn't make a deposit or withdraw from that account and i don't know the record goes into that frankly but it but it is stipulated that he that he asset and liability yes and i take it doesn't this case come down to whether the savings account is an asset of the sons or an asset of the taxpayers all right and why why wouldn't it be an asset of the taxpayers if it's being used by the taxpayers to pay their day to day household expenses if i have an asset and i transfer i gifted i'm per that's well within my rights to do so and by doing that i've made an era  proof that your position that that was a gift certainly did they file a gift tax return on that gift it was it was a large gift it was a large alien it would trigger a reporting requirement but i didn't see anything in the record about a gift tax return that's correct and it wasn't inquired into because again we did we stipulated that that cow the ownership was born by my andrew how was name was on the camp but isn't the absence of a gift tax return indicative that it wasn't a gift it was still there after i i don't know that it's indicative because again if the agency conducts an examination and they they look at these issues right and that we came to an agreement you know when you come to a stipulated fact that fact is found it can't be changed by the parties that were for this court frankly and we came to that agreement now meant that anders name is on the campus that what we're talking about the stipulation is that he is the owner of that account what about the substance of the form dr and that the tax court in the government relies upon  certainly in and that that argument is that the tax court ended up applying an equitable remedy right and so if there are further proceedings there needed to flesh that out if there if there isn't the satisfaction that fine you know we could be remanded for that purpose if the issue is whether that account could be used to satisfy the creditors  taxpayers then isn't it appropriate to look and see whether either under a fraudulent transfer or and nominee theory a creditor could get act that account sure that that is appropriate analysis however we again we stipulated that the ownership was andrew but there's a difference between ownership and applicable interest right i mean you son's name on the can't but the funds are being used by mom to pay mom and dad's living expenses understood however you're you are identifying the key term there you you said equitable ownership right and can that is a fundamental question that that we've raised right why can a tax court apply an equitable theory in looking at the issue of whether this account is available to the creditors the taxpayers because they do not have jurisdiction to do so there where you show me you haven't cited single pass that says a tax court doesn't have jurisdiction to use an applicable theory to determine time look at substance over form which is what judge mathis and he asked about and here what you're saying is that a taxpayer could engage in some shenanigans right before filing their although i would i would take exception to that because again like a fraudulent transfer case state that that implies i own this right i am i have to over this and i transfer because i was of when your creditor that's not what the record shows here there are the transfer made was not to avoid a creditor it was protected against him from himself because he was engaging in erratic spending behavior so under like a fraudulent transfer theory right  tax year she exercised total dominion and control over the over the account to pay st of all she expenses she did that mr hamilton did not and they are separate taxpayers for purposes of well but wasn't z and  wasn't she hadn't she basically taken over the family finances yes or both of them so in that sense when she dipped into the savings account to pay the grocery bills and the electric bill and everything else wasn't just paying for her bills it was the family and included her husband agreed however again that those transfers were not made to avoid the i r s they were they said that was not the purpose taxpayers it began it began that way we have no dispute with that however a person is free to transfer their their property in it and again it the command over that account became anders he could have withheld it any time and he had he had every he could have withdrawn that and went away i mean he is the one that had the rights to do that mrs hamilton did not and mithun hamilton certainly did not i take it though that if she can  transfer money out of the savings account to pay the mortgage she could transfer money out to pay the tax liability to with with the permission of her son but not without it and that gave her you know a lack of control that gave her inability to do that one of the disputes that i would sense from the briefs is that is the role of state law in addressing some of these issues and correct me if i'm wrong but i understood you to be arguing that that that state laws that portal and how we view the status of the savings account could you address that yeah courts have it again this comes from a you know the lack of definition in want to weigh the courts have typically look to state law the dry case in the supreme court applies to you know a collection case again this is an assessment case so it's there is a distinction there drive certainly requires that state law be analyzed to determine you know can't can you get it goes to what your arm if you raise can this asset be reached by a predator i think likely a fraudulent conveyance statute is is the most you know salient point although federal courts more often it's like a constructive trust resulting trust and and fraudulent you know what you will convey is fraudulent conveyance analysis all those take place under state law certainly the case of the tax court sided relied on a federal you talked for case that cited purely federal law and again they were all nominee cases applying and federal common law article three courts are exercising their equitable powers  record that and i can file a twenty three dollars letter but the briefing in this case was why don't usually judge foley in the tax court did not permit answering greets so we didn't really have an opportunity to respond to one another's  answer your time's expired let's hear from the government now conveyance of an asset and in a section one away determination the tax code is not concerned with the name of an account holder the tax code is concerned with whether a tax payer who is claiming an exclusion from income of a canceled dept actually realizes income from that debt and that's determined by examining that taxpayers assets and the taxpayers liabilities if the liabilities exceed the asset forgiveness of debt doesn't earn you anything because you're still in debt but if your assets exceed your liabilities the forgiveness of debt is an incremental benefit to you and that's why we do that analysis that the the scrutiny of assets is not limited simply to your property rights under state law or your presumptive property rights under state law in a bank account the standards announced in the carlson case in the tax court is that an asset of a debtor even if it may be exempt from the claim creditors under political state law so we're not concerned with whether you talk editor can reach this asset if that asset and the debtors other assets exceed the debtors liabilities the debtor has this is the standard the ability to pay an immediate tax on income from discharge from debt this and that is in this clear on the facts here mr vinson hamilton the taxpayer received a distribution from a partnership a movie theater business that he had been interested in excess of three hundred thousand dollars due to a family situation where his relatives wanted to be careful of his access to cash and spending it was apparently agreed that these funds would be deposited in an account in the name of the taxpayer such but as judge mchugh observed a taxpayer son had never used this account before the three hundred thousand dollars were deposited in it the account contained at most three hundred dollars and the transactions throughout the tax  eleven were all transacted by the taxpayers not by their son is it true though that the son could have any time have ended any access to that account by his mother there is no reason why he could not have as the nominal account holder but there was clearly an agreement between the two of them that she would continue to enjoy access to this  account we do not have any record evidence of a gift tax return or any other paper as the records show what the remote was was there testimony by the son about was no deal was with his parents i'm sorry and there was no testimony there was trial the case was submitted on the stipulated factual record which is all that we have in the appendix so we do not know of the existence of any agreement between the son and the mother but we infer one based on the facts in the record which are that the mother was the account of innocent and not the son provided to the mother account access credentials as soon as the amount was deposited the deposit was made on april  eighteen thousand dollars was the son was the son still in medical school during this tax year the record does not indicate that but the inference is that he well at the best we can tell that there were there were no school associated or personal expenses that he paid on behalf of myself there or not out of this account or the record is clear that out of this account only his mother withdrew the funds now there is another account in the record that was titled to presumably by him only once to the taxpayers joint account the rest of it seemed to be just his account that he was using but the vast majority of the funds the one that the account that contained the funds the taxpayers deposit it was the account from which taxpayers withdrew the funds the stipulated record what the state was of the son's medical education in two thousand and eleven we do know that the loans were taken out prior to two thousand and eleven because mrs hamilton applied for forgiveness of those ten we also know from the record that the sun was not a cobra on those phones so it apparently his parents procured those loans from the united states department of education on his behalf tax liability is just against vincent is that correct that is correct ok one of the arguments that they made is that that doesn't mean that mrs hamilton is automatically liable for that tax liability would you agree with that not precisely they did file jointly and a tax liability on a joint return is joint and several however the determination of assets suggest that it is appropriate to draw from this record the inference that mrs hamilton obtained any separate ownership or property interest in those funds merely because she acted as the family's agent and manage the finances and pay the electric bill and pay the mortgage but mr hamilton never accepts that account is that it appears from the record that he did not have the credentials to do so the record does not indicate whether she ever shared them with him but the inference is that she did not because there is a stipulated fact that the family sought to shield funds from his act so by use of that accurate to say that mr hamilton had no control over the savings account he didn't have the credentials in ever access to mrs hamilton did all the transfers and payments for expenses he was out of the loop i believe that is a fair characterization of the taxpayers goals in structuring this arrangement whether or not he had any influence over mrs hamilton withdrawal of the funds or her use of those funds to pay family expenses is not clear from this record but we do know that she was acting on his behalf and in his best interests she was paying family expenses she was managing all of the family finances because he lacked the capacity to do that there is no inference to be drawn from this record that he was anything but well served by this arrangement she was effectively taking almost a power of attorney over this asset which was payable to him the partnership interest was his name the k one is in the record the funds that were distribution were payable to him and those funds were deposited into his son's account with the understanding that his wife was in charge of the family finances that didn't operate to alienate those funds from vinson's they didn't cease to be his property just because he asked someone else or agreed that someone else should be handling his finances when he lacked the capacity to do so he so much of your argument this morning seems to rely on the substance over form principle and you haven't really mentioned the nominee theory to support that do you need the nominee theory to support your argument the nominee theory is one application of substance over form the tax court used here but we submit that it's not necessary to determine whether the tax payer needs the carlson standard under section one away which is do you have the ability to pay an immediate tax on income from the assets in your possession on your cancer death the tax court also seemed to rely on state law more than you do in your brief  at this point is in your view it is state law relevant to the issues now in this case state law is informative your honor but stateline fact goes too far because state law looks to remedies granted to creditors and that's that's a fine point to draw here but an important one because we are not suggesting that the tax court implement an equitable state law remedy to provide relief to a state law creditor under state law we are looking soley at a math problem what are you adding up here what assets are included in the taxpayers assets so going to the degree of analysis the tax court did almost proves too much which is could a creditor reach this asset and under utah law we suggest that that finding was not made on this record but it does appear that they could as as your honor noted the nominee remedy is applied in utah sometimes under the label constructive trust and sometimes under the label resulting trust of this court unpack that analysis in the home in case where you said st you must look when you are applying a remedy for a creditor st you must look to the interest under state law in the sticks in the bundle and then you look to you apply the federal nominee factors determine who's holding that bond that again as i said proves too much here we don't need to go that far when all were determining is whether a taxpayer has can reach his assets to pay his taxes on his canceled debt and owner of the account says no does that impact your theory at all not on these facts your honor becoming the son has no obligation to allow them to use the money in this account to pay their taxes so  eliminating all of the theories by which you ignored the son's ownership of that account it seems to me forgot a problem because they really don't have the ability unless the son gives them that right well and that's implicit in a nominee relationship is that the fact that it's a nominee relationship means that that choice is never made the sun on different facts the facts you describe absolutely could have completed that gift and i thought i you just were arguing that we don't need to get to the nominee theory and we don't need to get to constructive trust the resulting trust or fraudulent conveyance because the only issue is whether the taxpayers could reach into that account and pay their taxes that's correct and if that's the only issue the tax payers couldn't unless the son let them the son did let the near him did not make their taxes let him pay their mortgage he let them pay anything he was not that the record does not reflect that there was any discrimination in the amounts withdrawn or that there was any attention paid to how mrs hamilton spent those funds once they were transferred into the taxpayer's joint account now that the hypothetical that you could create a very different case if if their son on these facts during this tax year had instead said stop i disagree with how you are spending these funds and to protect my father or for whatever his purposes he cut her off as he could have it as the account holder then we would have a very different case and he would not be acting as the mere nominee he would not be simply a name on the account who  and permits the taxpayers to use the account as his own then he would then he would be using the account as his own that's not with these facts reflect these facts reflect that he provided account access to his mother and then looked away and never access the account himself never interfered with her use and enjoyment of those funds never made any inquiry as far as we know as to how the account was being  for he was using a different bank account for his purposes and in that sense you don't need a nominee theory because the facts are so clear if his relationship with the account were more complicated as your honor has posit this would be more complicated as well on these facts it's very simple because he did not use the account because he was a mere nominee a mere nominal account holder the funds in the account remained tax payers a et and they treated them as such for the duration of the relevant tax year given what your opposing counsel indicated about the opportunity to file a reply brief below would you concede that there is no waiver of the equitable powers argument we would not some concede your honor it is true that the tax court ordered expedited briefing on this but when parties are find that they have additional information to provide to the tax court prior to decision it is possible to return to the court and move for an amendment of the briefing schedule and filed reply briefs if those are necessary also i don't believe that it's clear on this record that respond as as as directly as i hopefully can hear what was waived was not the ability to challenge the application of the nominee theory of what was waived was the ability to argue that the tax court lacks jurisdiction to apply an equitable theory to reach a factual inference by counsel appreciate that your time is expired thank you counsel are excused we appreciate the arguments they were helpful in the