once again good morning my name is george connelly i represent the opposing real kristen in this proceeding and i'd like to reserve three minutes for a bottle at the conclusion of our common ground that please the court this matter involves something called the custom adjustable rate that structure which has been the subject of other cases as we've explained in a brief there are significant factual differences between mr christian's experience and the other reported cases we're here because quite frankly the export is that we decided other tactic cards cases never really ended to have aircraft piece of collateral your even if that could happen so i'm discounting that now why isn't that classically the responsibility of the trial tribunals know i don't understand your argument and he claimed boyle claimed the theft if you alluded to an adverse inference against the government for intimidation there's no evidence in the record that  i mean how can you how can you get around but boiled testimony whatever it may have been when boyle wouldn't testify to trisha i believe that the papers filed by boyle's lawyers in response to our indicate that he is part of an ongoing investigation by the southern district of new york u s attorney's office relating to alleged actual tears and as a result was not going to put himself on the stand our point very simply is this judge jordan is correct our testimony was rejected but it was rejected as uncorroborated or confession is it mr boyle had testified he could have corroborated every important point that mr christie made and we believe most of the cases that have come down in this area involve criminal proceedings where we can point to a prosecutor or an agent who goes through a witness and says a few testify will do thus and so we don't have that we have a more general threat to mr boyle we couldn't predict was testimony and what the government supposed to do in that honor it's very simply the fact that the government the united states government and its threats and mr well by virtue of adventure prosecution prevented us from putting him on but but that but that happens i mean that happens that people are under investigation therefore  honor we frankly felt that by subpoenaing mr boyle in arguing that he should be brought in to testify we had basically done everything we could and everything we were required to in the tax court minutes declaration ok he's unavailable but negative inference against the united states here the commissioner of internal revenue because mr boyle wasn't available or alternatively deem his testimony do you mr christmas testimony as is corroborated by mr han another as corrupt would have been corroborate croaker refused to let us have that testimony will be of mr austin well is that order in the record is that we have to leave it as part of the that kind of fact finding judge for jordan and that's what we've argued in our brit's we believe if you look at the record as a whole it was clearly erroneous for her to come to that conclusion but we're backstopping with the fact that if you could have had if we could have had boyle's testimony we could have corroborated every inherently incredible there was no nothink impeached i don't think a judge can simply say well the testimony is self serving and uncorroborated and therefore we're not going to tell the truth but totality of evidence ranging from the documentary evidence of the testimony mr crisma the deal really said neal i've known you for years you're in you're always looking for financing i know you've been involved in aircraft in fact i consulted with you years ago when i had a potential parents customer who want to do something i'm asking a pretty pointed question where in the record just see page four ninety two this is an aircraft financing deal these are my projections this is what i'm going to be doing i have a game plan for a thirty year loan setter well that is it is throughout mr christmas and several in five to six other cards feel the gust to showcase in the current case which rather decided cases you're involved hype over right back which admitted in a deferred prosecution agreement this thing was never supposed to go more than a year there is no such evidence in the record with respect to all the documents show that this was a thirty year home this was a loan that was called in here and the cards transaction presented i think it girl made that clear then that the cards transaction presented the fact that there there was an annual reset paid at which the bank could choose not to continue the loan but let's face it it's true and banks are in the business of making money it was mr christmas he had a good business deal to present to the bank at that reset date the back surely would have accepted but he never presented them originally with an aircraft deal because the aircraft were not going to be available until the end of two thousand and two secondly mr boyle said to him don't bother with a business plan or anything like that you know until next summer you know you set up oil as a straw man here that you could use but poor wasn't even the person  authority that could have given him that assurance was he was the relationship manager at the zurich capital markets in the fact of the matter is he was the face of it he was the guy was supposed to go out and get business for zurich back he was the guy who could have testified here's my authority here's what i what the basis of here's what they told me to go out and do we were prevented from putting all of that end to provide background for what mr president did could you address the penalty for vision one very important point your honor is the tax court never decided basis in fact the government filed a motion for summary judgment the effect that we had no basis to croak of the united in a you know i hate to sound sarcastic or facetious the fact of the matter is except the fifth of the night which say that i'm going on there marino opinion issued by this court which has language to that effect but also contrary not very specific findings that i'm a corporal of the taxpayer stipulated that the basis was way down here and so you would please remember something in goes to show there was never a contest with respect to economics up since a basis the only thing just to show argued about was whether the penalty was applicable whether he had reasonable cause of good faith if you would if we follow him if we if we away from the justice department representing the commissioner of internal revenue there have been five other cards cases addressed by the tax court and the court upheld the commissioner's determination that the transaction lacks economic substance and were us we think this is we disagree with think this court should follow with the love and circuit did and just to shop and with the tax court found in this case is found two things number one that the entire card's transaction should be disregarded for tax purposes when you says when there's lack of economic substance it's concluded that someone paid absolutely nothing because there's say that in the tax code but it it's the economic substance sock from this been developed by the courts including this court one of its primary in decision and it's well established that when a transaction or rather we flip it to be respected for tax purposes a transaction must have economic substance right so then so based on that you totally und you recalculate what they owe exactly but then the heavily provision seems to be when someone has engaged you know in a transaction that you know of and they're saying the basis is this and the correct basis really is something else it just seems under the language of the code that that applies to a real a real actual transaction not not to a sham whether while but there are seven circuits now in queens court real decision that has what is your correct basis and if there's a difference there and it results in a tax deficiency then the penalty applies and what punish is trying to do was to penalize you know attempts to create artificial losses either by inflating value or inflating the basis is zero and therefore so it's not actually said locks lacks economic substance without regard to value right whatever its basis and that was the same i think result in the merino case the parties there had stipulated that the basis right property to pursue the fifty thousand dollars and the taxpayer didn't get a fifty thousand dollar tax benefit no benefit and it was an actual piece of property where they said it's worth x x y here we don't have we have a transaction we have something that is basically a shell game so but we do have actual property because the property that generated the clean lost is the foreign currency the swiss currency of the swiss the s and the way the taxpayer claim the benefit is on its south return reported that its basis in the swiss currency was nine point four million exchanged at the same data acquired one point eight million it was the property's value and lo and behold a seven point six m  the if you were to spec the transaction the actual cost for it was one point eight million it's fair market value when this acquired and then it was exchanged the same day from one point eight million dollars but because the transaction does not have any economic things that's exactly right there that is exactly right that is exactly right the taxpayer has not addressed the reasonable cause argument we've addressed that in our brief corpus and questions on that i'd be happy to address if you want to talk per decided for personal reasons to claim that the moment his attorney thickness motion that mr boyle was doing this for personal reasons that there should be no adverse inference against the government and the parties in this case void and address that issue as two thousand and two mr crispin didn't put that package together as it was the tax were found it's not just that mr christian's testimony was and cooperated it's that mr christian's testimony conflicted with his own actions he never put together a credit package reserve bank he can see that on the stand that mr boyle does not have the authority to to deem what type of property would be acceptable collateral and therefore even if  will collateral that's not what he did here when he first established was with chinnery how much income nearest was going to earn in two thousand and one and the seven point six million dollars income and then if you look at  generate the seven point six million dollars loss that exactly offset the income earners in this case one of the other things that this to chris is this transaction wasn't designed specifically for him it was designed for somebody else and he picked it up i mean that for the tax benefits that's right here also doesn't that also a factor into the question of fact that he never pursued the financing and engaged in this transaction without any sort of written business plan or potbelly of analysis that would demonstrate that he was going to take nearest which had been a mortgage security company and transition over to an aircraft  leasing company that could have any further questions make mistakes were who were fiddle with basis and value in real transactions are to be treated worse than people who are engaged in complete she now picking your cl transaction one in which there's been a some inflation of pieces we look at the penalty regimen your honor there's negligence there's substantial understatement there's valuation the statement those three both kerry and all three kerry twenty percent it's the extreme forty percent penalty that's the problem here and our point very simply is in the transactions you describe i can't imagine someone coming up with a with a four hundred percent inflation of the value in a regular transaction and therefore that person shouldn't be wouldn't be worse off than what's happened here what the actual numbers here virtue of having it be called economic both of them so the next point i want to make is a misheard we seem to say in her comments that the value should be equivalent of cost of one point eight million dollars again there are rules of basis and value is not the limitation of basis the cash with any liabilities assumed in connection with the acquisition of property something you know what was the basis of the i believe it would be something like one million significantly more than four yes but but the i mean the point very simply is there are times in life when the value of property is greater or less than the basis and this is this is one of them and it was a real won't it was expected to be repaid over thirty years and was in fact down all of its non core business including these these cards transactions the the i guess and the second point very simply is this you and i don't just go to a credit committee we deal with a representative of pain and we want to look that was what mr bo position was for mr christie it wasn't appropriate for him a year before the transaction to go to the credit committee and say here's what i want to defend banks and not commit themselves to loans a year in advance but if his intent was to do what he says it was isn't it curious that he put it in the mortgage security company that he didn't start a new company and say this is my intent and we're going to call it in a transparent leasing his work with the mortgage security company was ended going to judge rangel it was a matter of what am i going to do with the money here and the cash in that company plus the financing is going to get before the fine if the planes thank you