of the particular case that we have before the court rises from the two thousand and eleven individual income tax obligation of mr barker in this particular case mr parker did not file his two thousand and eleven form one thousand and forty individual income tax return on a timely basis based upon two factors a far which destroyed some records and a nd factor the tax return that was filed was filed as a result of id theft the united states received the tax return filed as a result  fast but the united states meaning the i r s had on file forms that reflected that mr barker had received three million three hundred and seventy five thousand dollars of income that was not reported on the fraudulent tax return and as a result the i r s issued a statutory notice of deficiency after the sad story noticed a deficiency which alleged additional income of three million three hundred and seventy five thousand had been file mr parker retained counsel and responded and prior to court taking place before the united states tax court there mr parker filed a real tax return for two thousand and eleven which indeed reflected the three million three hundred and seventy five six yes ma'am it was that's returned not only reported to three million three hundred and seventy five thousand but it reported an additional three million three hundred and ninety one thousand seven hundred and twenty two dollars however mr barker had accumulated net operating losses from an entity known as so be entertainment l l c as your question you can just raise something in as a reference correct we are not saying that that is the basis for the basis for reversal in this case  the taxpayer and his council presented evidence that sody entertainment had lost funds each year from its inception and that there were net operating losses that were available that would offset the entire amount of the additional taxable income for two thousand and eleven the court only asl way to know how much of the net operating losses of so be entertainment where you were used up by those years and therefore the court had no way to know what amou backwards the court did not mention that and did not comprehend the debt meant that the only net operating losses that were necessary to review were the two  million ninety two thousand and ten because the taxpayer had properly elected to carry those net operating losses forward therefore they could not have been used up by prior years in under any circumstances even if they were taken back they could only be taken back two years so from two thousand and eight it could only be taken back to two thousand and six therefore the missing tax returns meaning to form ten forties for two thousand to two thousand and three in two thousand and four where se but more basically as i quote really laying whether there were reasonable business expenses here i couldn't tell it simply from the credit card or from the cash dispersement because it didn't indicate how and why those expenses were in fact legitimate business expenses in the ordinary course of mess and so he had difficulty i sabotaging the expenses as being expenses that could be built into the calculus and he said he had additional difficulty in calculating income as well so we said on both sides of the ledger he was on able to calculate what the real income was and what the real expenses that were probably the doc will and the burden was juggler go put it to you earlier your shoulders to establish that these expenses were proper business expenses that could be built into the calculations so his opinion raised the checks were there all of the bank statements were there and in two thousand and mr barker testified that he reviewed all checks before he signed on to make sure that they were paid  paying business the dutchman's in addition to mr barker the controller testified also with regard to the payment of business activity and the net result was seven but again to those years and not relevant to this argument two thousand and eight they were available two thousand and nine the general ledger was available and as the court well knows general ledger is based upon the source document which are the cancelled checks the general ledger categorizes what the check was for whether it was for advertising rent or some other expense where there are missing by her and  on a nice trip after a around the world absolutely your honor and that is why mr barker himself testified that the canceled checks from so be he was the signatory and was not go through looking into this record would reveal that he went through each track and sat shack number one this was for of advertising only expense with regard to or what he said was that he has the sole signature on it on the sole be it entertainment account that when the checks are prepared he refused the documentation and he is the one who signs them and you have the burden of establishing that expense x was for unnecessary an ordinary business undertaking sham why was checks and don't you have to show that had been consumed and so to the point that needs to be foot made is the tax court need not consider two thousand and two through two thousand and seven the only years were two thousand and eight through two thousand and ten which resulted in seven billion ninety eight million five hundred and eighteen thousand a net operating loss that the mr barker's returns reflect was not used and yes the court is correct the burden of proof is on the taxpayer it was that burden was clearly met in his case if and customarily an i r s audit what is produced for those audits is the tax return the bank statements the cancelled checks and the general ledger and all that was produced here in addition to that mr barker testified that he only signed checks that were business expenses and those checks were present canceled checks and evidence as well as the general ledger for two twelve thousand and nine dollars in addition to that the c p a who prepared the tax returns testified as well as the chief financial officer the government did not present any evidence to contradict the accuracy of any of those documents or the testimony of any of those individuals your honor this is a clear case in which the court focused and and were absorbed prior to two thousand and eleven because the petitioner did not produce his tax returns for two thousand and two through two thousand and four the call the courts simply was had forgotten that one hundred and seventy two only permits were your carry back and in this case the tax returns on their face showed it in twenty thousand and eighty nine and ten the election was made only to carry forward i believe this quote from the opinion further even if petitioner was able to substantiate sobeys business expenses we cannot know how much of those losses was absorbed by petitioners other income in the years prior to two thousand and eleven petitioner did not produce his tax three of the internal revenue code does permit carry back of not operating losses to be waived but it must be done on the time we file return if this court looks at mr parker's twenty million eighty two thousand nine tax returns you can see you get the two thousand and eight return was filed more than a year beyond the extended outline it was filed in november two thousand and sort of october two thousand and nine has two thousand and nine return was file eleven that he sent to the internal revenue service why is the commissioner was not allowed to issue a subsequent no this is deficiency officially just allowing additional deductions that mr barker put into that counsel below and his counsel recognized that they needed to raise and he did auctions they thought they were entitled to because even in his original petition he raised the net operating loss deduction even though he had not yet filed a return claiming the net operating gains and also united who is his sworn statement on his his return which he admitted that he had several much smaller amounts of income from another entity that he  owned and at the very beginning of the trial page five of the trial transcript accounted for the or said that there is evidence of additional income and that he would be getting to amend his answer to conform to conform his answer to the to the amended petition to be evidence of additional income submitted at trial he then he then did that following the after after the close of the trial  you carry back and thus he was required to carry back even for those years an additional point on this argument mr parker forfeited this argument it is a new argument that use raising for the st time on appeal is ringback the commissioner mentioned in his brief that the court should consider this argument to have been forfeited mr parker has made no attempt on appeal to explain why he fits into any you have the exceptional circumstances in which the court is willing to consider  three did not apply the court nonetheless should should reject the arguments on the merit as well mr barker's briefing makes clear that the numbers on which he relies for the calculations that he put into the  t section of his argument on appeal those numbers come both from mr barker's individual income tax returns and from so be entertainment's tense five information return ledger then yes your honor but i will i will say for the majority of the entries in the general ledger the general letter is not sufficient number one because it's just too vague from the general letter to understand wh disallows a deduction and says clear error by not considering that sufficient documentation no your honor again as a judge mark is that there are there are a limited number of expenses that could be obvious enough from the general life that they would be they they would have been you know potentially considered substantiated however the vast majority even combine with the cancelled checks the memo column in the general ledger generally my understanding is it corresponds to the memo line of the check and so just like the general ledger that checks somebody has an individual's name you know a memo that says expenses or entertainment or travel and then the in the charter ledger many of which are categories to travel and others are just say split which presumably means it was how do varies between multiple categories and this is not sufficient for a couple of reasons number one just looking through the general ledger it's obvious that there were many expenses that are subject to strict substantiation under section two hundred and seventy four of the internal revenue code anything for travel or and payments need to have strict substantiation which means there needs to be some sort of contemporaneous document like a receipt or a diary or a log but it explains what the what the date of the expense was the amount of the expense  of the expense to be expense it was a trip what the purpose of the trip was five to the extent it was entertainment who the recipient of that entertainment was what the purpose with the business purpose of the entertainment w still much too big for the vast majority of entries where it includes you know it includes things like an individual's name it just says legal fees and then you know some  will again someone needed to provide either additional documentary evidence and the forms of receipts explaining what was paid for or testimonial evidence in the form of someone explaining you know adrian were hundreds or thousands of entries but very high level testimony that his client gave that he was the only person finding checks and he made sure it was a real business expense before if you find not checked stuff not sufficient at the very least you need to be going how to goree by category through the types of expenses that were listed in the general ledger explaining who these individuals were who were receiving receiving payments what you payments were for to the extent there are things that just say an jewel's name and then if and expenses you need so that you know that person needed to testify about what their expenses were where there needed to be documentation to back it this all goes into showing that the that and ten which is that he points to the fact that there were missing returns for earlier years and crucial many crucial information missing from his two thousand and five to two thousand and seven returns however is it's clear from page twenty of the talk  do so as a result he has failed to show the there was a clear error in the talk sport finding what perspective on that operating was i see that i've used up all of my time i would be happy to answer any further for all prior years and by providing some returns that we're missing crucial information that meant that even assuming we accepted that the net operating losses were correct in the amount that he reported and that the income that he reported was correct we still wouldn't know the interplay of how much of the operating losses were absorbed by prior years and come so he was required to carry back so he needed to prove his income in the prior years to prove that that the net operating loss was not fully absorbed in those prior years so he failed to prove income which meant he failed to prove that not operating was not absorbed and then part two of it is that as you can see from the massive schedule c losses other schedule you losses from other businesses that he owns other losses that were just described as you know a loss of millions of dollars from other income to the extent that he had items on those prior year's tax returns that were reducing his income through losses or depressions or does he have to prove those just just like he had to prove his not  back it would go would be two thousand and six and mister d so d international or so be entertainment had net operating losses for two thousand and six no part of the net operating loss carry back would have been utilized i would also say the twenty million sixty two thousand and seven the records were complete meaning so be tax returns were introduced into evidence the bank statements were introduced as evidence the cancelled checks context of the facts of the day and that's why i asked whether this argument was even a race i didn't think it was your colleagues that it was and i just wanted you to and seventy two dollars b which is part of the net operating loss section of the two year waiving the two year carry back was raised or not i do not recall that it may have been raised in the one  thousand and seven but if we do that all the records required are there to substantiate the expenses and that that would be there would still be at approximately six one million that was raised your honor the government when when the taxpayer filed late but filed his two thousand and eleven tax return he reported an additional three million three hundred and seventy five thousand dollars and actually it was three million three hundred and ninety one thousand seven hundred and twenty two dollars and the united states recognize that and accepted that portion of the tax return and but  mention was made with regard to the expenses the cost of goods sold that were listed well into two thousand and seven tax return which the i r s accepted for the income and as a result no evidence was tax court said well used you stipulated to the authenticity know this record what is your objections not it's not real relevance and one of their objections was hearsay but mr barker years and grat as a result the court could not determine what amount of the net operating loss had been consumed but it is not necessary because the tax the years that were eight or two thousand and eight through through two thousand and what granted if that issue is found that never waiver needed to be played during trial then the years that are relevant are two thousand and six through two thousand and ten those years result is a net operating loss of approximately six million dollars and mr barker was denied the benefit of those of that net operating loss improperly we've asked that the court send this case back to the tax court to reopen the record and to make a finding as to the net operating loss and the effect on two thousand and eleven for the years two