payments including the deferred payment obligations were amounts received in the meaning of section one thousand and one of the eternal revenue code in may of one thousand nine hundred six when the obligation was created and for the same reasons they were amounts received within the meaning of recognize the tax and have to pay the tax it doesn't have anything to do with whether there's a taxable event or whether there's been an amount realised section four fifty three assume that there has been a taxable event if you look at the text t eighty and bardsley versus commissioner thirty one tax court twelve sixty three make that clear but i think the most important point is that section four fifty three presupposes a taxable event right might have got there if we accept your if you said my argument so forty three basically has nothing to do with the analysis of this case and this record that we have to paint on a broader canvas so we have to parse some of these nuances yes going forward and really you're going to have a lot of upset plaintiff's attorneys throughout the united states if we adopt your theory who who settle cases based on structured settlements for example and now their clients are going to have to pay a whole lot of money well where for fifty three by its own terms doesn't even come into play because there was no income we're focused on your case but i'm we have to paint on a broader campus here i mean it's we have to consider the effect on other cases that might be prof doesn't apply might i start out with a hypothetical if there's a settlement today that's four fifty three apply and you said after first getting back to your case you said no you didn't think it did because there's that for all sorts of  whether structure or not and doesn't that create huge problems broader problems at least when you have periodic that might present problems for future plaintiffs but if i'm right that doesn't apply because of of the title this year things like i stand your question but my point is section four fifty three doesn't apply to this case and you don't need to go past that the reason it doesn't apply to this case is there was no income that came from this transaction you don't need to know i understand your argument completely but if we decided that if we if we accept your argument that any time you have a periodic payment of this time that you have to attribute it's all taxable in the first year then of course you get out because under your theory the law was different under the theory going forward at any point if you settle or pursuant to a statute like there as there are many states that require some periodic payments you are going to have to pay the tax the first year even if the settlement goes paid in installments over ninety nine years that's the natural consequence of your argument i'm  trying to bridge the gap that's that's all all going to be taxable first year and the plan for have the money to pay and that's that's a natural consequence of that and it applies retroactively it's been applied to non economic but i just you know this case does in many respects have a lot of could cause a lot of unintended consequences i don't think so but i think what this case turns and it is whether there was a disposition within the me exaction one thousand and one and at what point you recognize the income and how much was realized at the time of the disposition let me ask you one more question that's that's just a practical consequence how do you view the application of situation i'm not sure that the let me answer that in a play i'm not sure that i have an answer to that as i stand here right now guy i haven't really considered that i don't think the case turns and then i think with the case turned on i'm just trying to understand the practical implications of this carefully analyzed california law determine that under section one fifty three of the california civil code a legal claim is considered a choice of action which is considered personal property and went on to say that  code such such claims are transferable so there was property here there clearly was a disposition of the property under cases such as the herbert estate case and all the marital aren't but there's no basis for that distinction that doesn't come from anything that that's that that's the made up of it for the purpose of this litigation so once you determine that there's been a disposition of property the next question is what was the amount realized and warren jones  whole new tax and what you have here is seventy years of of law where damage is an account of nonphysical injuries are absolutely excluded for an income you change that the government has yet to provide an understandable rationalization as to why in economic terms eliminating exclusion that's been on the books for seventy years would not be considered a new tax well you know the problem is that that was subject to a lot of the date on whether reputation damage constituted a personal injury whether emotional distress damages constituted personalising within the meaning of the statute i mean i was a highly debated matter congress chose to resolve it  a personal injury based on reputation is not transferable as of under section nine fifty four of the california civil code certain kinds of claims are party wants to assert against insurance company but got into california law there's no direct cause of action in front of for the third party they settle with the tortfeasor and the taken a sign of the first party claims part of part of the so much that happens differ with you on california law i think i think you may just have to assume that that's the case because if i must tell you it happens all the time and then recognized in the batteries context where you have which is analogous it's a it's a bad faith finding a company or that would be a personal injury claim asserting damage to reputation it would be a claim against the insurance company to fail to paying for some sort of jam contract we're talking about  it's your honor i have no quarrel with the idea that contract claims or tort claims related to damages to property would be assignable under california california law before they're reduced to judgment harling with that is a general rule your honor i am quarreling it with says it with respect to a personal injury reputational claim i don't think i don't quite understand the difference because there seems to me you have just as an action as personal property and so that is a category regardless of what the what the what the climate system and you can give generally speaking absence statutory constraints you can give you can take a security most most part most there are many cases where you mix and match there if you have reputation damage emotional distress personal injury claims wrongful termination are all part of one large suit i don't know how we would parse out  past fifteen years or so and not a single case in the supreme court or anywhere else addresses or treats the resolution of a personal injury claim as a disposition of property under section one thousand  business for example and then the claim is resolved and the question is how is that to be taxed and that's that's kind of a thorny question and i think judge posner said it really hadn't been addressed by many courts  and his conclusion was that you have to look to the origin of the claim and in this case of course because you have that injury to personal reputation you don't have any kind of resolution of a property dispute it would be taxe one thousand and one would be an extremely bad rule to indorse with repercussions for for for all sorts of settlements what the taxpayer is arguing is that everything should be taxable in the year that you enter into the settlement or the it but getting back to the definition of property it really does get of this morning because so used the definition of property in the bankruptcy code this is clearly would fall to that this is an example if you think about property interests in terms of constitutional but in california the arguments made that because goodwill is property that in fact you can argue that it's damage to property in california so so depending on how we decide what property is you can you can make a consequence was the commissioner has you lose the ability to put a tax lien on it right i think you would i don't think you would have the ability to put a tax lien on it until mr prolonged got his recovery yes or in california with respect to that exception to nine fifty four because mr plunks property interests or whatever it has the label of the shows in action but for for it him with respect to his personal injury claim that label doesn't really have any significance as a property right it seems to me until he gets his recovery because if he dies it's gone there's nothing for anybody to inherit unlike other kinds of forms of action that would survive  sufficient for a federal tax to attach that's a separate question of course from what are the incidence of income taxation on an accession to wealth and what kind of exceptional wealth is this this is analogous to an appointment contract and that's what the supreme fees and he thinks it's probably the same problem now as before the fact it's a wash yeah that's so that it just doesn't affect the analysis with respect to section four fifty three i think what i would urge this court to do is to say for fifty three doesn't apply to this case because there was no income so forty three is just a hypothetical possibility and leave for another date the question of whether a post effective date structured settlement does come within section four fifty three as the commissioner urges and i really would urge  and not resolve that question and where it's not necessary to resolve it i'd also point out with respect to four fifty three if it did apply  treatment and with respect to the property question there's not much that i can add i think that the still case does resolve the question you look to california law to determine whether there's a property interest and under nine fifty three i think there was any further questions