good morning may please the court my name is evan borgia's and i represent the taxpayer in this appeal of thomas reuben it's important that i address  what the very present in all the government's briefs before the district court and in this court of appeal which is an attempt to cast a dark cloud over mr proven i know it sometimes is you know maybe a corny or trite to say but i think in the context of this of appeal it is not trite to say that mr ruben is entitle to equal protection of the law the tax laws applied up all taxpayers as the court knows regardless of background popularity popularity or even prior convictions and this court's decision of course will apply to all taxpayers let me ask you  ok so in terms of it my understanding is it's it's not disputed he did not file an eighty eighty two right form that's correct for the three years that matter from one thousand nine hundred to two thousand that's and it's your understanding that the government at this point there's a government taking a position it's not a hard and fast rule that you have to file an eighty eighty two or are they still contending that you must file and eighty two in order to lay out consistent inconsistency well that's a good question i read their brief on appeal as saying that it's not a hard and fast rule however your honor i think what's critical to point out is that the for the district court and i encourage the court to review the government's motion for judgment on the pleadings before the district court because their entire brief before the district court with an exception was focused on a legally erroneous premise which was that somehow the power of a bankruptcy trustee to file a return for each of subchapter s corporation the separate right of a subchapter s shareholder to file an inconsistent return they've abandoned that position on appeal unfortunately it was the thrust of their motion below what well i'm about to say your honor the as to the notice issue what's revealing is that all the government argued below was not whether they received actual notice they conceded actual notice before the district court the government argued only that mr r and the government can speak for itself seems to me to be teed up in a slightly different way which is that we may have been able to figure out what was going on with regard to this tax payer but the requirement is is intended to keep us from having to figure out for ourselves rather imposing on the taxpayer the requirement to identify explicitly what the differences are and your client did not identif explicitly what the differences are submitted information that didn't make it a big leap to figure out what the differences are so i understand that correctly your honor i think your honor is generally generally correct but there is one piece that's missing from the record on appeal and i appeared in this case only three weeks ago i was not i did not participate in the briefing or talk about it together the record but  the i was taught by a guy who representing a professional accounting firms and malpractise cases he said on financial statement silly thing you need to read is the footnotes so in one footnote of the government's brief there is a reference to something that is not in the appellate record that is before the district court docket and it's a it's a one page document it's this document one dash one before the district court docket and at page seventy nine of one  document what it is is it's the explanatory cover letter from mr rubin's accountant to the i r s in closing the three amended returns i mention this your honor we make sure you know this is something that was before the district correct so it is officially in the record we can deal with it even though it's not in the air correct your honor i mean you'd have to take notice of it it's not in the appellate record well whatever was for the district court is technically before us so we all are i just want to make sure i know where to find it so could you repeat exactly gotter it is we would find it yes it's a document one dash one filed april fourteen two thousand and sixteen at page seventy nine of one hundred four and your honor on on the notice side of the question this is a very important document and i actually and this is what i would emphasize to the court to go back and read the government's brief before the district court because what the government does in its brief before the district court is it lays of an extraordinary understanding of what the tax issues or and you can't get there just by citing to the paragraphs of the complaint you one has to get there by looking at the exhibits to the complaint the government but i think there's any question but that the government i think stands that but they they do fairly say look we've done we were diving into this case is this lawsuit filed there are lawyers involved now of course you'd expect us to look real hard but we're processing millions and millions of tax returns it can't be a game of making as guess where somebody is doing something different without saying it so that's a fact that the government may have actual knowledge is important but that only goes so far the question becomes did your client mean what the statute seems to require is a quote a statement a done a fine the inconsistency yes and the inconsistency actually is  not meant to refer to the difference between your client's original return an amended return which is the schedule your client did file but the inconsistency between the corporate return and your client's treatment and that's correct  what your client says should have been correct the corporate turn but it doesn't list what the corporate turn actually was so so is that enough to run a fire the inconsistency i would submit of course and i think the government is dancing on the head of a pin because what this the tax issues here while complicated are really not that complicated there are two fundamental issues and these are called subchapter s items they end up on the corporate return and then are transferred to the individuals for the shareholders return there's two subchapter s items at issue here one is a what they call a bad debt write off for accounts receivable of twenty three million dollars which if recognized in the year two thousand has an impact that the i r s and accountants all know secondly there's the significant issue of what they call cancellation of debt income and whether the company essentially in two thousand was insolvent or broke and couldn't pay its debts of sixty six million dollars which are then recognized as cancellation of debt income by accountants and there was a change in the law and the eight one supreme court decision in get let's states that for cancellation of in debt income during the period that get with supplies it increases the tax payers basis these are gateway threshold issues that once the i r s understands them and they did and they do not  actual notice i think that's imperative once an account for the i r s understands these issues and once one looks at the cover letter submitted by mr rubin sickout and which guides the i r s and says what one has to do here is look at the year two thousand which is the keystone year two thousand is the year where losses result based on application of these doctrines on bad debt write off n c o d income and then the losses carry back to prior years which is mathematical the year two thousand is the year that mr reubens accountant for illustration purposes and to help the i r s and frankly do its work for it showed what a hike the that ickle subchapter s return for the corporation would look like so that the i r s could see that what mr ruben was claiming was correct the assumption of the i r s is that somehow somewhere in their files they didn't have the original subchapter s return what's the most important document in this appeal if i lose one thing i can get through it oral argument is the i r s adjudication of this claim which is set forth that they are three four five three four six is a letter from the i r s to mr ruben in april two thousand and fourteen nine years after he submitted his initial refund request and in this letter the i r s demonstrates knowledge of every single one of the issues that were raised as to subject matter treatment and dollar amount and it's really your honor the issue is treatment under the statute of the subchapter s item which is not necessarily correlate with dollar amount if i could make one a few more points i don't know if my time is extended for questions because of the questions or argue well i know they're going to hear from the i r s and give you two minutes all right that all there is one more point course to leave that is that the other issue raised with regard to tax your two thousand and one i don't see anything in the papers that have been filed by your client prior to this time suggest is really a dispute  for united states section sixty thirty seven c of the internal revenue code requires shareholders in this corporation to do one of two things either conform their treatment of corporate items to a file court return or file with the i r s a statement identifying  don't basis the inconsistency is in treatment jumping right to the heart of the it's the purpose of yes just so that i understand this i don't really ever want your job but that but it is so if people don't do this then from your standpoint then they don't have any chance to get the refund even though they might otherwise be entitled to it is that correct that's correct you are that are right and is the point that by doing this that this is a flag for people doing taxes to make sure that people don't sneak something by that's correct aaron to make and somehow you realize that all of this was out here so something put you on notice of that to tell him he didn't like you know we're not going to let you go forward because you didn't but lay out the emphasis  enough specificity right that's correct hold out what was going on it says this is a person you know sometimes we have tax cases where people are involved and elaborate schemes to defraud the government or they go to seminars and they say they don't have to pay any cases here from what i can ascertain this person paid all the taxes that he was required to pay and then when their worse different circumstances came back and said well now i'm entitled to a refund is that correct that's correct you are right so it's not as if you're not looking at this is some sort of fraudulent t is obviously for the purpose of a motion for judgment to pleadings be assume the facts as alleged in the can point there there is the issue of the fact that mr rubin was involved in investing money from the s corporation he's now saying that because that company ultimately was not able to pay its debts in a timely manner and ultimately may have had creditors write off those debts because of his criminal conduct that that justifies the accelerating certain tax items there might be a certain inequity honda before us with the current question that oh yes easy that's what you might get to down the road if the case is brought back to life but the issue now simply has to do with whether the taxpayer did enough to fly the difference that's correct  what did the taxpayer fail to do to fly the difference what we think that the taxpayer needed to do is provide an item by item basis what the corporation did and what he did that is inconsistent with a corporation so if you were falling in eighty  to satisfy the requirement it would be an easy way for him to do that in this situation he was clearly aware of the form because he used in the subsequent tax year we're not suggesting that that's the only way to do so here so if he had attached to what he did submit the pro forma if he had attached a copy of what had actually been filed on behalf of the corporation would that have sufficed i think that that probably would have or he could have been a strikethrough on the pro forma that he submitted saying this is what the corporation originally reported here's what i'm saying the corporation should have reported but that's not what he actually did he said very clearly what the difference is between his original return his amended return but he never said this is a position taken by the corporation this is a position that i'm taking  thing consistent with that corporate position well i'm not sure that's really the case i mean if you look at his two thousand attachment he explains the pro forma he attaches as the accountant for taxpayer has prepared a pro forma blah blah blah blah blah blah blah for the calendar year two thousand after having explained that the bankruptcy trustee had not prepared an amendment so i look at this i mean it's it's i don't find it at all difficult to infer that hence this is different from what was previously filed as obviously knows it was previously filed because it was filed with the i r s so how does that not say look these are that this is different in that i understand that it doesn't put side by side the numbers but i have difficulty understanding how this doesn't adana fi the fact that there are in consistencies event of a doesn't actually identify what the inconsistency is are we with me here are that section sixty thirty seven c does require the taxpayer to say what the inconsistency is are that it releases the tax the shareholder from his duty to conform his return to the corporate turn only put those items for which the taxpayer for which the star holder identifies the inconsistency in treatment we think that the way to identify the inconsistency isn't treatment is to say the corporation did one thing i'm doing another and to say what those two things are it's not identifying inconsistency to say the corporation took positions that i didn't that i disagree with the corporation took positions with research respect to destructive indebtedness they disagree with what mr we needed to do was say the corporation reported income of ten dollars i'm reporting income of zero we don't think that he did that we think that finding that mr rubin complied with sixty thirty seven c would require an assumption an assumption that what he did when he filed his original returns was to comport those returns literally in every specific see the file focused media return and we would further on the twelfth emotion but i believe that the rest did have to actually retrieve the focus filed returns from its files and do a line by line comparison between the pro forma return that mr rubin five submitted and whatever he did identified that right so and we would submit that not only is the iris potentially dealing with multiple stakeholders whether there are multiple total shareholders or multiple potential partners in a partnership but it's also dealing potentially with multiple tax years for example net operating losses which is one of the items for which spreading potentially across numerous tax years result in a situation where consistent reporting or clear identification of the inconsistent treatment is essential to tax the ministration in dealing with the  it depends on what kind of a requirement it is we would say that this is a substantive requirement that goes to the merits of the taxpayer's claim similar to the comedy a consistency that this court addressed in the state of ashman and janice versus commissioner and because changed that in the proceedings below the government said that mr rubin had to comply with sixty three seven c and the way to do that was by following it for maybe eighty two was i think it's reasonable to say that they were saying that was the only way i don't think that's a defensible reading of the statute there's no regulation there's no revenue procedure that we can point to that says this is the only way what we're doing is comparing what mr rubin did against sixty thirty seven that's the test i just don't have a basis to come in here and say that the particular form sometimes in the last week it focused on lots of issues and we just forget what actually happened ok and this is a taxpayer who things actually happened to what actually occurred here is that the mr rubin's playing in substantial detail on the merits based on his identification of inconsistent treatment it's inconsistent treatment that's required under the statute that's in the narrative it are one ninety three that is accounted provided that judge cliff clifton was reading from it's it's in the package of documents he submitted i would submit that it was an over abundance of information that mr rubin submitted regardless actual notice to the i r s was provided the iris adjudicated under this court's martino's decision which is based on justice frankfurters decision in angeles milling if the i r s unmistak at the administrative level it waives the defense of irregularity in the notice of the inception of the process so what are they doing now now they're creating a fiction they're creating a fiction that they're ignoring that they knew everything below they understood it completely they judicata that they're saying oh wait there was an irregularity at the beginning well it didn't matter to the i r s on the administrative level they waived it under this court's martina's decision and the supreme court's angeles milling decision last thing they now say oh well it's an affirmative defense in other words the notice of inconsistency issue is an affirmative defense look at their answer i would cut that back of the court to look at their answer the second to permit of defense that they refer doesn't even cite sixty thirty seven doesn't even mention the notice of a consistency what that affirmative defense refers to is what i would submit is a is a legally erroneous statement that a bankruptcy trustees exclusive right to fall for the corporation  affirmative defense of mr rubin should be entitled to leave to amend if anything to go through this cyrus letter it was attached as an exhibit to his opposition blow dyer esus response before the trial court was oh that's not in the record they got actual notice they adjudicated it in extensive detail and so all the parade of horribles of what if what if it's this case they're the ones creating a fiction the fiction of some defective notice at the beginning that didn't matter to anybody until