four based on clear error the district court ruled that we had not satisfied our burden to show that the employee benefit plan was not substantially i'm a similar to the tax avoidance arrangement in ninety five thirty four some the first error that the court made was then the court found that there was direct access to cash the court found that four hundred thousand dollars was paid to i'm going to see the court said vs i'm going to presume that it that the court man the individual and the individual didn't receive v was going to receive any of the small i'm going to make a difference whether it was v or is it you know descendants or whoever gets the death benefits well that there is a significant difference th death benefit after mr v dies that's paid to his that was to his designated beneficiary who was his his wife is a tax credit not only is it a tax protected benefit but ninety five thirty for the notice addresses benefits other than death benefits so what we're looking for is whether there was a benefit other than a death benefit and ninety five thirty four describes to benefits that are other than  benefits they are disability benefits and severance benefits when you get a disability benefit that's paid to the living participant you get a severance benefits paid to the living participant that was the focus of ninety five the notice ninety five thirty four was the payment of money to the living participant the case law that looks at it recognizes that where there were individual insurance policies for each one of the participants where the participants actually could control the money could borrow against the money and could use the money that that was that was tax avoidance but ninety five thirty four addresses benefits other than death benefits that's why your honor your question about what difference it makes is that the difference is one that takes this case and this plan out of notice ninety five thirty four so you say there's no way in which  himself could have benefited from this money that's exactly right he under the terms of the plan the only benefit that's paid is a benefit that spade when the when the participant dice there was no way and there's no evidence that he got any money that he access to any money or that he received any money in fact no money has been paid yet mr v is still alive and hopefully well and when he dies his of beneficiary will receive the found without a citation to the record that mr v so i think it's on page nine of the opinion of the district court opinion that mr v executed the surrender but that's actually playing error if you look at the surrender notice number sixty eight you'll see that there's no place for mr v to sign and he didn't sign the trustee and the plan administrator surrendered because that's a power that they have because all that this plan promises  instance one happened was the the the exit of the trust moved from one contract to another and moved from a contract it was with mony mutual of new york and to a contract that was with fidelity security life f s l but there was no there was no money that was provided to mr v in connection with the surrender and the plan does he to allow it so we have now two errors where the court has shown first of all that the court said that he received money which he didn't and can't and the court said then he surrendered which he didn't and he can't so what you have is is two elements of ninety five thirty four that the court found which are both based on factual error there is no support for the and the court didn't provide any support in the in the record for it because there isn't any support in the record for either of those so without access and without receiving anything other than providing anything other than death benefits this isn't can't be a ninety five thirty four hour arrangement in addition to the court talks about experience rating and separate accounting but in point effect the experience here was experience that that hundred forty thousand dollars was used to purchase a paid out death benefit of the four hundred thousand dollars this is beneficiary will receive upon his death but also but the government also i'm i'm not sure if there is a letter or there isn't a letter but what we have is the i don't think if there was a letter like that i don't know that it was for money but what we do have a circumstance where if you sell a death benefit and when and done people can buy and sell what they may want if this benefit were sold it would turn nontaxable income into taxable income that can't be part of a tax of witness program and it certainly couldn't involve the plan because the plan prohibits the alienation of benefits and there's no insurance contract that could be sold because mr v didn't have an insurance country the insurance contracts involved here were group term policies and they were owned by the trust so couldn't mr v have gone out and said to somebody my wife is supposed to receive a death benefit i want to sell that well i guess he could have done that but if he although he could have done that what he would have done is converted taxable nontaxable income into taxable income that's why i say it's hard to call that a tax avoidance system in the in our reply brief you pointed out that there is one circumstance where an individual can sell a death benefit that's tax protected and that's a fiat tical sentiment it's closely regulated by the internal revenue service and under one of six internal revenue code and and that is the one circumstance where you can do it with the univision has to be terminally ill and they expected to die within two years and it's the sale of a country from nothing else but in this particular instance there was no  morning your honor thank you very much ms please the court randolph hunter for the united states i want to focus on exactly what is the proper focus of this case which is  ninety five thirty four the features described in ninety five thirty four and whether the plan at issue in this case is substantially similar to the arrangement described in ninety five thirty four and the district court found that it was it stated that all of the factors are met and the evidence fully completely supports that the arrangements described in ninety five thirty four like the plan the plan purports to provide welfare benefits it informs participants that all contributions are tax deductible at the time they are made the contributions to the plan are far in excess of what it cost to provide term insurance the plan utilizes insurance policies that for all intents and purposes function just as universal life policies it requires insurance companies to mean separate accounting of future participants i know that eleven said that there's no way in which  the can use this insurance to be taxes that if it's converted it takes the cash it gives the cash to his beneficiary that'll be taxable that is probably the way that things should happen but it still violates the internal revenue code as a result now i want to point out that in c g s marketing pro brochures and everything it says that this is a good way to c j a plan is a good way to avoid estate taxes m in his deposition said that the people who choose to involve themselves in this plan do so for estate planning purposes in order to move assets from the corporation make sure they don't get an individual's a state and then pass it on to their beneficiaries that's not a welfare benefit that's property a welfare benefit is supposed to provide insurance and benefits while you're working and you don't then carry on an asset later on so even if you did declare later on that that income was set that payout was income it's still that's not the way that's a that's an improper use of a welfare benefit plan it's not supposed to accumulate deduction of contributions you're making to build up an asset then you that you later take out of the company and guess what you've never paid income tax on that c g a says it's been and it's a program that there's a way to avoid that completely by transferring the rights to that insurance benefit to the beneficiaries without getting payout directly you've created these individuals who invest in the plan they've created an asset that's not supposed to happen nothing under ninety five thirty four nothing under the statute allows that to happen that's not a welfare benefit so there's four hundred thousand dollars a year that just court me in saying that he actually received the four hundred thousand dollars in in light of that say it's irrelevant it is irrelevant it is true he did not get a payout of four hundred thousand dollars what he got was an insurance certificate that says this is your property and by the way it's worth one hundred fifty five thousand dollars it keeps earning interest every year and this is your property basically to do with what you will you you are not supposed to build up assets like that in a welfare benefits plan and by the way the very first exhibit that we put in our first supplemental appendix of course is the letter that you refer to where it's the secretary says that the basically the insurance policy can be cashed in so this  entirely improper use of the welfare benefit plan it creates an asset it's designed for tax avoidance pacifically designed for tax avoidance in the for in the way that mr anger testified it so an asset protecting when it is can take cash in if it ever is but even if it's not that's not the point he's created he's taken money from his corporation to create an asset to pass on to his beneficiaries and he's taken deductions for that that are providing welfare benefits he's taken deductions you're not supposed to take deductions for something like that unless you contribute to say something like an ira if you don't take individual liabilities and as we mentioned in a footnote in our brief that text case is in the tax court i don't believe a final settlement or decision has been entered in that case but he absolutely has taken in the irises opinion deductions that were not ordinary in their lives or their this case is that if the rice urn of the government is losing tax money and that's being litigated in the tax or what what is the purpose of this litigation because the purpose of this litigation is to assign penalties the iris issued the notice ninety five thirty four and issues notices from time to time describing listed transactions and there's a specific penalty in the internal revenue code if you don't properly report being involved in listed transactions and the whole reason for that is to combat these tax shelters and to tell people up front you invest in these things you need to tell us about it furthermore you need to fink about it and probably not do it because the i r s wants to stop this abuse so this is only this case is only about the ten thousand dollars penalty that was imposed for four different years because fees did not properly report it's a gauge meant the issue before this court is already that's an is the entire i'm sorry forty thousand dollars is all that's involved in this yes you're on the issue before this court is not whether this plan is acceptable under four nineteen or four thousand nine hundred eight the issue of this case before this court is not whether any of these contributions are deductible the only issue is whether v's marketing participated in a transaction that is a listed transaction and in this case that means did they participate in a transaction that is substantially similar to that described in noticed ninety five thirty four that is the simple answer it issued before this court it doesn't involve the complexities of how the plan actually works but the evidence the records the exhibits clearly support what the district court found it had no problem in the end it conducted a trial and threw a lot of exhibits that had no problems conclusion that yes the plan just very obviously meets all of the features listed in ninety five thirty four and i take it the marketing materials and the plan documents were consistent with one another they were certainly not consistent with one another that's we point to the exhibits in the way the plan was actually carried out in marketing and in examples that they gave to clients the plan document is careful to stick within the parameters of the law but the plan document does not control the government has had many cases like this involving welfare benefit plans recently the endless booth  the taxpayer the the individual says but the plan documents it controls and the courts don't look at that the courts look at the way it actually was carried out form does not control over substance so the plan document is it is a red herring it can say what it wants to the evidence clearly as for example in exhibits in testimony it says that the plan document that was rewritten in two thousand to wri out medical reimbursement being available to you you before that you could get you could build up these assets and you could then have it paid out to you in turn in a form of medical reimbursements for health care that you had to pay for by the way that's an improper expense deduction you can't take a deduction in one year for an expense that you take in ten years from now you can't do that you can take a deduction for an expense you have that year so but that's beside the point the point is that an example as we show that in years following two thousand two thousand and five two thousand six two thousand and seven they still advertised and advi marketing material the record evidence is that the plan was administered pursuant to the plan documents that advertising was contrary but advertising does not control unless the ad tyson was followed and the plane was administered pursuant to the advertising otherwise the rule of law is in vis circuit and in the united states that according to the supreme court and according to to to this circuit that a plan is a plan is required to be administered in accordance with its terms and there is no record evidence here that there was any benefit paid other than the death benefit upon the death of participants and therefore the notion then that there was something else going on michael and this a question about whether or not my client is supposed to be penalized for what the plan did or whether my client gets penalize for somebody else's ever tyson and ninety five thirty four isn't about advertising ninety five thirty four that notes about what the plan did in your honor when when this penalty first came into being it was two hundred thousand dollars was the minimum penalty but a time my client them the government assessed my client the plant the congress said and the president had amended and amended the penalty down from two hundred thousand to ten thousand dollars a year that's them the minimum penalty and the letter that the government has pointed to which is the first letter in it's in its supplemental of hendrix right is not to my client because my client didn't have an insurance contract my client has a right to a benefit to be paid when mr v dies the letter from mony is to the trust in fact when the money to pay for the the the paid up benefit which by the way it's part of a funding policy that's described in the plan under section six point one it's not amazing or nefarious a plan is required to have a funding policy this plan did have a funding policy it has a provision for the payment of benefits it's section section five point three through five point six this case is not a deductibility case this case is about whether or not the plan which was a minister according to which stars is consistent or are substantially similar to the arrangement in ninety five thirty four and i submit to you that the ruling by the district court that relied on one error