honorable judges of this court primary issue before this court is whether when a taxpayer provides the only evidence on a particular issue and this case is painstakingly detailed testimony regarding that then the number of hours of the taxpayer spent on the duck two activities in two thousand and five and such evidence is corroborated by other witnesses was not impeached or contradicted can such evidence be disregarded by the tax court or labeling it as self serving jury trial the better half of the  day was spent going through the amount of time that the president and c e o of the taxpayer front your custom builders his name is activities under the regulations some examples of these are ductile activities include marketing selling or advertising overall management and policy the office of the chief executive strategic business planning general financial accounting and planning including general budgeting and financial management including banking relations and cash management personnel policy and quality control policy for example mr bopp testified that on a weekly basis he he met with the sales team reviewed the cash needs of the company met with customers summarized by activity how many hours he spent generally on that particular activity on a weekly basis and then we did the same on a monthly basis and then the same on a quarterly and  disregarded mr bob's testimony regarding the number of hours and spent on a weekly monthly quarterly basis was that they said that it was self serving and that it was unsubstantiated but the problem here is that the  his testimony was corroborated by other witnesses that one on our side and one on the government side they they both said and from the government side we produced it via cross examination they both corroborated that mr bott spent most of the year on sales and marketing activities and growing the company which is to be expected for a changed their theory of the case and spent a lot of time trying to figure out if the deficiency amount was higher under the second reiteration versus the first can you give me the clearest record citation to tell me that the deficiency amount was higher i'm going to ask the government to tell me the best record citation that the deficiency amount was not hire that that constituted a new matter but it said it didn't need to change the burden because it did harm your client and then your brief says it harmed your client i'm asking you what but we you know we could've known as you know that the government was going to make that session or concession so we can chill an adult laughter so because you settled for some some other issue the amount w different lower but it would not have been lower had you not settled on some side deal that's not relevant to what were the deficiency was higher or lower yes or ok would you have prepared differently for the hearing of the  trial based upon the don't method of calculation i mean were you hurt by how you presented or how you conducted the trial because they put their worries on you we to be honest i don't we went i o trial thinking that the number to beat was the number that the government preferred in its stipulated computation and and  says that a tax court may reject testimony that it finds improbable that that alone can be the reason the tax court finds for the government the the  dissenting opinion but the problem with with the with the other authorities is that those are solely based on the the taxpayer's own testimony in this case it it well there there was no express or implied finding as to credibility on this issue by the tax court that merely calling itself serving i don't think does the job in terms of a preponderance of the evidence and when we have when we produce the only evidence on mr bob some number of hours just based on the record itself there are there can be no i know there a conclusion regarding how the capitalized and those that weren't deductible the taxpayer is a builder of homes and the uniform capitalization rules apply to producers of property and a builder clearly falls within the definition of producer it means to produce means to construct build install manufacture develop or improve it and the term is construed broadly  in consistent with the purpose of section two sixty three capital and to avoid distortions of income by requiring matching of items of income and expense the fact that the t axpayer hired sub contractors to actually build the homes doesn't make a difference because section two sixty three a g what g two of explosive provides  that a taxpayer is considered the producer of property producer under contract it has to capitalize is long as it's the one putting the class in the taxpayer did purchased the materials for the homes and held title to the to the homes and the underlying property i'm particularly interested in the de minimus exception and whether or not the burden shifted to the commissioner if the burden didn't fact shift to the commissioner did the commissioner meet its burden on de minimus ok we don't aren't the commissioners position is that the tax court was correct that it didn't there was no need to get into shifting the burden because of both sides and used evidence and so the question becomes is there a preponderance but going back to section seventy four ninety one which is the the provision that all shifts the burden to the commissioner of the taxpayer first house to submit credible evidence and  that's one way to shift the burden you could shift the burden also though that what we were talking about earlier because the calculations method is different than the originally submitted calculations method which results in a higher deficiency could you address maybe one for you to be the commissioner has the burden of proof on you matter and that tax court first observed on page twelve that the change of calculation at the post road briefs stage was a kin to a new matter but it went on of pages nineteen to twenty two effectively decide that it was not new matter  the second reason was there were two reasons the second one i could just get out quickly conflicts complicated the tax court filing that the tax payer was not prejudiced because it made no argument based on regular which subsection of the bridge and regulations the calculation was being made under it just had a flat position that everything was deductible and  secondly the the calculation different change did not require the presentation of other evidence some was already presented with a deficiency amount higher in the second calculation presentation two you can see that apart from the other concession that made the whole total bell no i don't concede that because the switch was and these changes are discussed in the post trial brief docs sixty seven pages twenty eight to twenty nine and there's another discussion of computation in the commissioner's preach wrote memorandum it doc forty four it's pages six to seven in the pretrial memorandum the commissioner explained that the original notice of deficiency was based on the simplified production cost method but that in the exhibit nine are you know of something which is also attached  there's more material attached to return on the room but there was the commissioner already changed to a combination of the simplify production cost method and  the simplified service cost method ok if i wanted to just be able to go to a document and the record that would say the deficiency was x and or the first method and the deficiency was either x or x minus one minus whatever on the second method so that the deficiency was not increased what would be the best document to look at for that proposition well you keep you don't know when to you get to the ratio and you don't know the ratio until you know where the other chips fall so what you really need to know is since these costs since the ratios are based on you know total cost being in the denominator and either capitalize a bowl or deductible cost being in the numerator you don't know where you stand on these allocation methods and till you know where the other costs fall and then you get the ratio so that we think it is significant that in the pretrial memo the commissioner pointed out that even though he was changing from the production cost method to a combination of the simplify production cost method and simplified service cost method the deficiency did not change and so we submit that changing back to just the simplified production cost method for some of the items wouldn't of itself result in a necessarily lower deficiency but that's what i was trying to figure out because the  other side says that that the courts wrong on that that the deficiency did change well and so i want to test whether the deficiency changed or not willed to deficiency but there were some agreed adjustments right apart  those to one side and see if the deficiencies higher or lower well i suspect that the concessions and stipulated you know agreement that some of these close word to dr bill as well as  the tax court for its for example disagreed with the commissioner about the deductibility of the end will retreat and the travel costs to go to the annual retreat those things affect the bottom  line i'm sorry i think i've taken too much your time with the deficiency do you want to get onto the seventy four ninety one factors that would also shift the burden of it and with the seventy four ninety one focus on the tax court said it is  clear that the tax payer meets the criteria of sections seventy four nine one eight to see and which is which refers partly to the net worth requirement and there wasn't any direct evidence of the corporation's net worth at the time it filed a petition in the tax court in two thousand and ten well there was to testimony is direct evidence you mean did so i don't but if that is direct evidence by definition testimony and he testified that the rate was five million didn't file under seven million he testified in self that was under seven million it may be that it wasn't corroborated but it's certainly there is direct evidence of the value net worth isn't there well you may be right about that but it may have related to an earlier time it may not have related to the time of finding the petition which is the time that is the controlling time and but we would submit that even if there was simply the direct testimony  that is not good enough why is that not good enough well in the fact that testimony self serving doesn't mean it's not credible often testimony is self serving in many many cases the witness testifies about their own instance a good way of doing it would have been to have audited and audited financial statement of the date of filing of the petition that wasn't done another way to do it would have been to show the return for the year twenty zero nine and show the return for twenty zero ten twenty ten because the return has a balance sheet but to merely assert oh the net worth is five million it doesn't allow the finder of fact to probe and analyze that's not sufficient it's not sufficient and so that's why the tax court was not comfortable with us and uk even if they met the net worth requirement  think that there's another reason why the burden isn't shifted under section seventy four ninety one which is that the commissioner that the requirement to be co operative extends to pretrial proceedings in the tax court and the commissioner had to file motions to compel discovery and so we would say that is another reason for not shifting the burden under section seventy four ninety one so i did want to talk a little bit more about  the evidence you know even if the government had the burden of proof we think that this record really justifies the tax court was a lot of evidence that the president's time was spent in production related activities and overall management activity substandard effect production in a substantial way they have to be the cost have to be allocated to production practices so to come forward with evidence that it was more than ten percent of his time was spent doing these production related activities and that's that's you would actually have to have evidence that if you bore the burden of proof well i could i think that there's testified that  that he spent eight to twelve hours a week with the president and he saw him three days a week and there are there's so that alone would get you over ten percent threshold but there are a lot of other activities that i would just like to avert first of all the president created process seize and develop procedures for building homes he stopped on the previous year clearly the testimony is that all of his processes were set up in a previous year and he's implementing it the process is now ok we'll move on to the next point then your honor which is that he stopped by a building work sites if problems arose that could not be resolved by project managers he just goes and that's not an accurate citation to the record about the building work sites and that's in this characterization of the testimony that he wasn't dealing with building issues he was dealing well i know that someone who was a project manager during the years it issues said that the taxpayer resolved difficulties that the project managers couldn't resolve and i don't think taxpayers seriously di e and the taxpayer chosen to install the computer aided design software and of the he told the iris agent who was working on the pretrial preparation that he used software to design for five homes during two thousand and five and that he reviewed the other designers work so the techs have testified that he didn't completely design any to learn the stages of completion of the projects and to discuss the critical situations with the employees and the knowledge of the stages of completion also allowed him to to determine bills he received month in the courts and productivity schedules detailing when the job would close and whether the project managers were running at hundred percent productivity's he was the direct boss of all employees including hearing this year he wanted to buy a whole section of thirty five house slots which would have been a wonderful opportunity for this company then they got little black boxes under yellow paper and that's the microphone so if you just keep your paper off it won't make a crawling noise thank you but the so you don't with the developed developers regarding the purchase of land that is a production cost he drove around with chris wh rick before chris what your why were when they were buying a whole section he would do and chris why record go to something called a takedown meeting where the various builders would bid on lots to build a month he would drive around with chris why rick he would look at the trees to see if there were too many or too few they would look at where the manhole covers would interfere with the where they wanted to put a driveway they would look at the sewer configurations to see if it would cost them money to reconfigure them if they bought designed fabrics but he had them produced by a sub contractor that he worked closely with the oversaw and own that then he sold fabrics and there was a seventy five percent allocation to production in that case and we think this is very similar to do please distinguish the gryphon and elk in case it's particularly griffen that corroborated testimony  that there was authority in the eighth circuit saying you don't have to credit an contradicted testimony and and there was a case uming argument go that griffin still has some authority what do you could just griffin to hurt your case oh well it's not binding in this court and if we were to apply griffin do you lose well you know because this testimony was contradicted on some important points and you know what i think what we're getting into here is this the tax court this is the province of the fact finder where do you believe somebody and of the testimony of the president of the court of the corporation was skewed because he was very willing to quantify the times that you know the time spent on the you should look at which party it uses the evidence but but that so statement was dictum because it's said that it didn't have to be the case didn't turn on that because the commissioner had put all his eggs in one basket by not even you know engaging with that he just saying no discount no valuation discount is deficiency going down appellants reply brief on page pages eight and nine specifically document nine j and documents sixty seven highlight the reduction of of bops but potential deduction due to the heat changes finally with respect to the number of hours that is actually in the record exhibit twenty two p from the bops capitalize of all activities were his meetings with the project managers which is roughly two hours per week which on a fifty five to seventy hour work week is much much less than five percent of total activities this under this kate under this court's a state of elkins case the day novo standard is appropriate because this case involves either a purely legal issue or mix questions of law and fact namely whether the tax court correctly applied the law regarding the de minimus test the impact of the i r s raising a new matter and the corresponding burden of proof issues and whether uncontroverted testimony absent a finding of it not being believable not credible or unreasonable can be disregarded and discounted as self serving  the record eight to twelve hours per week of design time eight so if there are eight to twelve hours and then we would have to factor in the full twenty seven to twenty eight eight hundred our annual annual i schedule and then a significant portion of these design meetings some were for design but there is testimony from mr bott about the significant sales activities that also occurred in those meetings this court in a state of elkins has noted quote that quote th court neither expressed nor implied credibility concerns with any witness lay or expert so there are no credibility calls to which we owe special deference the same is true here given that the tax court has not expressed nor implied credibility concerns with any witness the tax court judge or the tax court in general and our specific judge in this case knows how to specifically call into question credibility if issues that the tax court judge did  commissioner further just like the taxpayer in the state of elkins case here only front tier has submitted evidence regarding the quantum of hours mr bob spent on deductible activities in his state of upton's this court noted quote we repeat for emphasis that the states and contradicted unimpeached and eminently credible evidence in support of its fractional ownership discounts is not just a preponderance of such evidence it is the only such evidence accordingly here in this in this case that the tax court should not be allowed to simply disregard and discount testimony that is so critical in this case especially when it is an contradicted unimpeached eminently credible and corroborated including by the government's own witness mr y rick and especially when the government made absolutely no attempt to refute such testimony the record makes clear that front here hired the contractors to build the homes the government acknowledged that in in his presentation mr bush did not do any hammering did not do any building rather he was running his business collecting provided the only record the only evidence just like the state of elkins that the court can rely on and again it goes to two hours per week which is much