question of which is the appropriate standard to be applied whether it's the the objective standard which has been followed in the fifth circuit or whether it's the subjective standard which has been followed in the third circuit of the thompson ca counsel for the responded directly to suggest that there's no conflict with all due respect i think there clearly is there's a difference between trying to find objective business purpose for example under strain he and whether or not as the tax court did in this case it's truly purely a question of quote unquote good faith and i think those are two very different standards so the first question is in which direction this circuit wishes to go peroration there were two liabilities attached to the property line the first was the purchase money mortgage with great western savings and loan that was in essence transferred into the limited partnership and in fact the i has put great weight on that as being an indication of how the deceiving retain the enjoyment of the property after the transfer because the partnership paid the made the monthly payments on the first mortgage as we indicated in our briefs the reason that that was done under california law is because of the deed of trust a great western carried with it an assignment of rights so the right to receive the income was the the right to receive the income the rental income was transferred to the partnership the obligation to make the payments on the purchase money mortgage with great western savings and loan which was secured by that rental income under the deed of trust was transferred to the partnership the one that you said it was in essence transferred was it ever formally transferred the partnership was never listed as the primary i mean part of she made payments but that obligation there was never innovation now it was done of actually ok the partnership the bank was aware that the partnership was making the payments instead for capital account for the payments it was making on her behalf the partnership agreement required the partnership agreement provided that scene would hold the partnership harmless for the amount of the principal reduction in the first with the contribution that there was nothing in the partnership agreement that said that she would hold the partnership harmless for the interest port e problem when one does not have a an objective standard to follow is that the the decisions become subject to certain vagaries and subjective determinations for example in this case the tax court referred only to good face did not look at did not look at whether or not there was a full and adequate consideration paid for the transfer in this case clearly there was one point four five million of real property was was exchanged for one point four five million of personal property limited partners at the end of which are excluding the three hundred fifty thousand dollars that the partnership you say assumed on her behalf but the ultimate the gross value as of one point four five million is the same the net value is the same as well because if the if the property is sold by the partnership as it ultimately was then the gross  separate and apart from the receipt of the limited partnership unit yes she didn't receive any separate consideration for assuming the debt it was simply a question of not  contract but we start time a consideration you say well now the partnership really didn't ever assume the obligation is you can't say that it's a one point four and it's a wash because there's the additional loan that the partnership took the property subject to the loan the the value of the partnership the day before the property transfer was transferred was i believe three hundred dollars the value of the property of the partnership the day after the property is transferred is one point four five million last the amount the principal amount of the l in in both instances they are in exchange for that transfer the partnership gave the deceit and limited partnership units which reflected the value of the that's her personal obligation then she receives three hundred fifty thousand dollars more right i understand your feelings i'd like to touch briefly five a on on the questions of business purpose i mean you offer three one was protecting as i recall protecting the limited partners from personal liability right correct second one was protecting him from partners from creditor liability wri there was also i believe the fourth business purpose we've touched on the main ones and that was the fact that there were as i indicated there were twelve different different owners involved spread across the country from southern california to maine if the a limited partnership is certainly a more efficient way to to own property and manage property then tenants in common in addition to the liability protections provides and in fact the church cases said similar similar kind of situations where undivided fractionalized interests were combined into a family limited partnership in the church case that's perfectly reasonable business purpose this property was it was designed to be a invest in whole this was not a property designed to generate a great it wasn't generating any any particular monthly income from the  economically a break even proposition when one included the the payment on the first mortgage great question that even a breakeven when you say that that that the partnership wasn't obligated to pay right i would respectfully disagree that the partnership wasn't obligated to pay the debt because the partnership was receiving the income if i suppose if one transferred the property to the partnership and said ok here i'm going to give you this piece of property but i'm going to keep to myself the right to receive all the rental income and i'm going to keep pay myself that the mortgage payment which is secured by that rental income under the deed of trust then the partnership would be generating a profit and well actually it wouldn't be running at a loss because would have the money to pay all the other maintenance expenses well at the end today the major benefit here was to avoid estate taxes wasn't i mean in reality i'm not saying was the primary purpose but in fact there were no creditors other than the back there were no claims and there were no partition actions those of the three business protection of owners by by means of being limited partners and sort of tenants in common and reasonably likely to provide them with a business purpose yes did it turn out that they didn't need it because there was no catastrophic her own creditors and as potentially to the tort claims against the property right she did not the trust no longer however had potential liability as it would have us attended in common if one of the grandchildren living in new york or connecticut was involved in a catastrophic automobile accident and the plaintiff sought to reach that grandchild interest in the property that was now out of reach first of all the big old place a lot of emphasis on whether there is some tension between the legal standards and various circuits i think that the corby case that we stand in a few weeks ago from the eighth circuit in our twenty eight j letter really illustrates that there is the mother had had instead of one property that was worth a million and half say she'd had two houses that were worth half as much if she put one of them in the park or ship and which ain the other one so that she had enough assets to live on these cases well no only way to look at that is to draw the inference that there must have been an implied agreement among the children because otherwise this would have been financial suicide nobody who's eighty five years old says gee i'm in assisted living my insurance policy is about to run out i think this idea that if you're trying to take advantage of this you really have to turn square corners and and keep the accounts in order but the tax court was really i think relying on in finding a retained interest two different things we rely on two different things one is the fact that she had  retained benefit in the sense that she retained debt but the partnership was paying it for her but the other big aspect of this was what i just mentioned a minute ago that she really had no other assets to live on and the court was finding a retaine interest because otherwise this arrangement would have made no sense she would have been completely impoverishing herself and something i think to emphasize in that regard is the fact that judge wardlaw i think you asked earlier how her assisted living was being wasn't being paid by the rent it was being paid by two insurance policies that she had they were of fixed duration and everybody knew that this wasn't a surprise and at the time that she formed the partnership one of those policies was going to expire and i think eight or nine months later the other one was a year after that so everybody certainly knew that if the mother lived to that point she was going to be hitting a financial on and it's not a stretch to imagine that whatever the partnership documents  said the children must have had an understanding that when that insurance ran out they were going to do something to take care of their mother and in fact the testimony of the trial more or less confirmed that the testimony was that when those policies were getting close to running now the children decided that they were going to sell this house and put it into something that they said would be a more liquid asset something that would maybe generate more income which is commendable in a sense i mean we should all be so lucky to have children that take such good care of their mothers but it really the notion that this partnership was conducting a business if you're conducting if you're in the business of renting in property out you make your decisions about when to buy and sell based on the market conditions and whether you think you can get a better return on a different property that sort of thing you know decide to sell it because you need it to take care of your mother what that really reflects is the fact that everybody knew that yes the papers might say that this was owned by a partnership but they all knew it was really mom's house and they were going to make sure that she was provide heard there one other point that i thought i should perhaps respond to in the reply brief the estate makes towards the end of the brief what really appears to be a new argument that they didn't raise below they make an argument that oh there's inconsistency here between arguing that exchanging the house for partnership units which were worth less that's not inconsistent because they say at the moment of the exchange the partnership units were worth t same and they only got this sort of discount for lack of marketability and minority interest and so forth over the course of three and a half years as the mother gradually gave property away there's at least two problems with that argument the first is it not only isn't supported by the record but the record says exactly the opposite and i would direct the court to our supplemental excerpt of records have forty one within that document page sixteen which is one of the appraisal reports that were submitted with the estate tax return where the estates appraiser said that she created this partnership in late december of ninety four and by the end of december she'd given away  six thousand units of the partnership's it was only a couple of weeks in between in the fraser said there was no change in the value of those units during that time period and he assigned his lack of marketability discount of thirty one percent i think it was to that entire period so the evidence doesn't support the claim that they're trying to make in that regard the other point that i would make is that if they had raised that below i suspect the commission would have been able to assert some version of a step transaction type of a doctrine which is that this was really all one transaction that she created the partnership and transferred the units to her children in within a matter of a week or two because that was the point of the whole thing it was the gifting aspect of this so they can't really be and her estate and subsequently her husband's estate who's also died in addition after the property was sold and the proceeds were distributed each of the limited partners paid capital gains tax on the amount of i ask you want to take the morning break now or do you want to wait till after the next argument and i would appreciate if we could take the break right now for a get we will take a ten minute recess thank you