multiplicity of proceeding problems and reconciles all of the implicated statute one the supreme court is not only supreme the supreme court was correct when justice scalia said every partner's outside bases must still be determined at the parker level before the penalties or impose to that supreme court sequence undetermined deficiency that must await this proceeding that we'd like to participate in part and finally present our regional caused fences you come up with an unknown when you apply the wrong forty percent when it should be at twenty percent to a deficiency includes non basis items you know that most both prongs of the formula all wrong three only the supreme court's sequence reconciles the whole all of the impact stat the stand that you can't actually impose the tax until after a certain partner level proceedings have taken place but at the s either wait until the tax code proceedings are done or they could perform on abbreviated audit and find out what the basis was c due process c d p i think they call it process so you don't even have to pay the tax and then sue for refund you could wait confusing because we start with the basic rule on every tax case and they can't income tax case i have the choice of going to tax court prepayment on judge anderson or district court to refund basis or court of federal claims the complication here if we think that the supreme court sequence works you it makes sense to deal with the partnership penalty that relates to a partnership item in the partnership perceiving this dealing with that it makes sense to do i have no doubt it would make most sense but congress didn't say that congress was pretty clear in what they say it and it doesn't it's not as efficient as your way  and it is now abated wrong in that regard yes i believe you are incorrect in that and the other complication is after the partnership proceeding the statute gives the government one year to issue a it would make more sense therefore list do it that way the syllogism is the tax code must make sense and we can reform it premises tax code must make sense and we can reform it if we think we can do it adjustment to a partnership item it doesn't say anything about how you deal with penalty to relate to an affected item that's left within the deficiency proceeding and when you go no no no the what is of the parent out of correlative partnership item plus which it only here not not because there are plenty above the situation if the if you part of it goes through the definition of an affected i or all affected items have both partner level considerations and partnership level considerations congress if they intended to ship all penalties to the partnership level there's no need for this limitation of adjustment related to a partnership item they've said all provisional bases only and that's the predicate for justice alito to quote that every part is just a basis must be determined at the partnership level before the penalty may be imposed which is consistent an abbreviated get the proper basis make their us less money and then you can challenge it in a c d p to two thousand and one i think the one year limitation on the notice of computational adjustment v p collection due process proceeding your honor there is an administrative there's a required it ministry of collection due process proceedings so we defeat it both purposes for the very parents out of full amendment that was done in and ninety seven and so we say that justice scalia correctly harmonized all of these statues that you just can't take one parent article and then reduce eight of the essential partnership item element that parents article to a partnership i don't commit to a surplusage and say that all penalties have been export to the partnership level he three times he stressed the determination at the partnership level is only  that when you got a voted percent penalty you can't you can't impose the penalty and do you know what the deficiency is  end there is a statute of limitations running on assessment as well and so that creates a problem i mean if partners can simply push out efficiency proceedings until after the the assessments that what you're going to do that we don't have that case but he could have rooted notice of deficiency so the only way you can do it maybe is that kind of abbreviated audit so you can find out what the basis is what this taxpayer paid for knowing the amount the i r s based on the information in the the taxpayer's return did it's computational judgment is not making up numbers here it's just disallowing certain things are it had access to what the taxpayer had actually paid for originally before he contributed to the partnership he has had access to the basis well the i r s knew how much the partner had contributed to the partnership which was a total of between the options and the sixty two thousand five hundred dollars cash one hundred and eighty one thousand dollars right now just because there may be some factual determinations left for a partner level proceeding doesn't mean any number is going to change necessarily and you know correct well in the notice of excuse me in the computational just months following the partnership level proceedings you know the i r s and this gets to a little bit of the mr rogers argument about the provisional nature of the penalty it's provisional only in two senses it's provisional in the sense that the supreme court recognized that there's no jurisdiction at the partnership level proceeding to impose that penalty or to make any adjustments to partner's return it's also provisional in the sense that the i r s has to look at the return to see whether the errors at the partnership level were carried through to the rich to the return so the i r s here looked at the the losses that were claimed and because it's a sham determination and the transaction lacked economic substance few paragraphs found the answer my question my question is how they knew what the basis was what my st question that is it not true that to figure out what the based on the numbers that were originally reported on the return that's what the i r s has to work with if there is some sort of adjustment in the they just to zero it out as a sham transaction and then let him come in in the refund suit and say oh but wait  precisely iraqis that is that is correct that any country here is onder stand it is he's got to pay to play mary figure has he not and then go in and get the money back he it pays the poem very figure based on zero ing out and then he goes in and ask for a refund of what he has paid into the term refund right that i mean there's a refund option and what he is are what mr rogers argued is that high point couldn't afford to pay it within the  months and the response to that is that you shouldn't have been involved in sham transactions st your problem congress had congress could have said any sham transaction you will lose everything on the basis plus you owe us fifty percent of what you claimed for and that would not have been unconstitutional or of contrary to any other statute well matter of conversation statute so basically your position is yeah life is tough for tax shelters sometimes the dollars and then that would impact this calculation is forty percent penalty which is what about two million dollars right now right so it turns out he doesn't owe two million dollars half a one million or one million dollars you know it well it won't be it won't be that low a week if there's any but let's assume it would be a lot lower than it would be half that would be one million dollars what happens at that point we say the tax court has no jurisdiction and we've got looking at a two million dollars penalty that ultimately won't be the right number at the right number might be in theory one million dollars how how is that sorted out of sort of at the end of deficiency process you know the numbers are simply griffin you know it's just right well if the deficiency in the efficiency proceeding if there is any change at all there need not be a deficiency proceeding it's not inherent that there will be changes if there's if there's any adjustment here to be extremely minor but partner level defenses are available so if this court has no further questions i don't believe we do thank you thank you very much mr altered five minutes full full she leaves  seems clear to me we do not have all the tax go it did not have jurisdiction over this penalty in the instant deficiency proceedings and thus properly dismissed that potion of the ca the end of the appeal and we've got no business saying anything about assessment correct that ye actually the partnership proceeding is by statute conclusive with respect to the partner level proceeding and the partnership level proceeding sustain the final partnership administrative adjustment that said that all of the partnership transactions including the purchase of the year olds that were distributed or deemed to be engaged in by the partner and so as fact those call spaces of those items were the obligation of the government to determine the basis as a consequence of the conclusively established partnership proceeding in its because it proves the point that one cannot say oh there's no way it's ok to read these statutes in a way that we impose a penalty and they start collecting assets on the penalties a partnership has every partner's adjusted basis must be determined at our level before it's imposed it must he do to your earlier point i would not say that the tax court had jurisdiction in this situation he did say that it cannot the the penalty cannot be imposed until the partner look love determination is made and we all agree that the partner level deficiency determination has to be made in the partnership level and so there's no imposition that can be made of the penalty same time same time we deal with that and we say that congress deliberately end of imposing a limitation that relates to a partnership item in the parent the tickle did not say all penalties go over and so when you read the statutes in conjunction with each other they lead you to the conclusion that justice delayed it yes justice scalia was dealing with the partnership i don't judge barnes absolutely but he's talking about the sequence that the penalty cannot be impose here the penalty was imposed it was incest assessed after we were in tax court they're out chasing the assets after in tax court we have a right to restraint against that premature collection is it not true that you can and without prepaying you can make these arguments in a c d p proceeding you can and we say you that's not the requirement we would rather deal with our defenses straight up and say we don't understand you to do that and when i think it is that you do allow it is it not impossible for you to your defenses without paying  think you are correct your honor we do have the ability to as an alternative after we take the assessment that we think is inappropriate to contest that and a collection due process invent alternative satisf the how it should work you don't have to have the refund sued because you have that alternative no yarn because in and under that sort you don't have to have a tax court jurisdiction because you have that all the time the penley in that circumstance has been before the determination of the basis or the deficiency or reasonable cause so it reverses justice scalia's sequence and we're asking you to follow this sequence as a practical matter i'm sure your client doesn't care much about who has jurisdiction where he cares and it cares about money as a practical matter and because you're not doing this with a deficiency stage you're challenging this because they're trying to go after assets right now yes and what your client wishes to do is to forestall until then we don't have the right to go see the thank you thank you would take to case under 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