year through a series of administrative audits and this sort of appeal proceedings and litigation in the tax court the issue presented here is whether the i r s should be allowed in permitted to collect from michael to cards as an individual more than four times the corporate income tax liability that went unpaid from westside so your you know that's an interesting way of phrasing it if he'd chosen to pay the taxes just of the time of sussman he wouldn't be faced with the multiples on i'd respond by saying it wasn't his choice the tax return that reported this liability was filed more than six months after mr card she sold his interest in the corporation and he had nothing to do with the company at the time and he had nothing to do with the tax arrangements that  the litigation now in front of us he had nothing to do there was a distressed debt transaction that the stock purchased certain plummeted in november of two thousand and three mr carty sold his stock in september so there was a several week if not several months just time difference between his disposition of the stock and the transaction that generated the underpayment i don't think you answered my question i asked whether he had anything to do with the transactions of the subs litigation in front of us he sold his stock and that's all he did never talk to any of their lawyers about the tech shelter certainly a lot of his advisors at press waterhouse coopers and handlers of the law firm were aware that there was a hypothetical strategy that the stock purchaser put on the table as one way that it might at under the contract satisfy its obligation to satisfy the taxes the purchaser contractually represented to mr karshi that it would satisfy fully and those are the words in the contract the income tax liability of westside cellular so yes to answer your question your honor mr carty was aware of his advisors more specifically word where that there was a hypothetical strategy put on the table as one way that the stock purchaser might satisfy that tax liability it also could have simply paid the tax i recognize that it got into a bad deal that happens to stock purchases all the time they buy stock think they can satisfy a liability and the liability turns out to be far higher or greater than they s trend was a completely unrelated third party in this case mr carty there's no even allegation that he was somehow colluding with them there are allegations of clues in between rob a bank and global financial institution and for a trend that there's no allegation of this to karachi in any way clue to them he sold his stock that's all he did so yes to answer your question he was aware that there was a strategy that was put on the table as a hypothetical by the stock purchaser but i think that's something different from the economic substance cases that this court has decided in the past and the frank lyons case from one thousand nine hundred seven out of the supreme court where the taxpayer goes in and in their mind they intend to enter a new transaction to see their own taxes and so with you apply that two prong test that this court has articulated there you've got the mindset of a taxpayer going in to save or in some way of void or evade there own this is not the kind of individual with that sort of tax avoidance mindset animists going into the transaction but if you add those two figures together that's still a lot less than the i r s that he owed when he received the money from the settlement correct i would go back your honor and say that mr carty did not know that tax we have to distinguish between his personal tax liability which was fully paid never disputed and certainly not refunded by the i r s the tax liability at issue in this case is the liability when the tax return was filed by the new owners of westside cellular that they thought they could implement a strategy to avoid obviously that didn't work otherwise we wouldn't be here today but it's not orders of magnitude different from the liability that government said he has to do which is to liquidate the corporation point i'll come back to in terms of what his options were at the time so i know a greaser is a number of issues and these cases are complicated and they involve both the house state law and federal law but if i could just focus the court's attention on two points one is the factual error that we raise in our briefs and that is with respect to the tax court's characterization of the transaction and in particular the timing of the transaction and i certainly don't mean to elevate the form of the transaction over in substance substance is of critical importance and the ultimate question for this court but the starting point has to be the right form and you can't look at this court's t prong test and think about the object of economics of it if you get the ordering right and the way the tax court described the transaction it's said that the money that was used to purchase m came from west side well if that's the case this if those are the facts this case is over you can't use a corporation's own cash to to purchase it stuck but it's undisputed and i think the record makes clear the government doesn't contest that timing wise the money came from rob a bank and it may have been a very short term timing but in the context of a secured lending transaction which this case involved albeit not one mr target had anything to do skirt lending element of it timing was of absolute critical importance as this court knows if you've got a security wonder that comes to the county courthouse with a written record recorded we in our security interest moments after somebody else does that is of absolutely critical importance so to getting that to get that form starting point right i think is very important here if you don't get that right than looking at the object of substance of it which is one of the two prongs in this court's economic substance to us you have the complete wrong starting point you're using the corporations own stock in this is a completely different case so i'd just like to highlight that nagin tie it back to what this court said in the sloan decision that you've got the two prong tasks the object of factor and if you don't get the facts right to start with and you say that the corporations own cash was used to purchase the stock then that whole inquiry that first prong the object of praga the inquiry gets off on the wrong foot and is necessarily flawed so i'd flag that the second point i'd like to make is with respect to the economic substance townson again going back to this court's decision and sloan and how that test should be applied before talking about the legal issues there i would like to point out a very important distinction between this case and the so called mid co cases the very first sentence from judge in the song case says that this case i e sloan involves two sales michael jakarta's case does not involve two sales it involves one sto there were no appreciated assets in this case and i think that's an important distinction because in all of those other mid coke aces decided by the other circuit courts a taxpayer is going along with appreciated assets in a corporation and with the intent to avoid the tax on those appreciated assets at the corporate level they switch it into a stock so basically at the eleventh hour that didn't happen in this case there's no intent in avoiding the corporate tax at be on the charges part because there were no assets there to be salt so mr carter is only intent was to sell a stock is only intent was to make money and of course there was a tax element of it he was aware of some tax saving strategy on the part of the buyer but his cash than he could have of otherwise obtained if he had just liquidated the corporation and the only way he was able to do that or intended to be able to do that was through the avoidance of west sides tax liability now if westside had just transferred the money to him directly and for example in a distribution without paying his taxes he would have been liable as transferee i think there's any dispute about that so the question then is whether there's any difference between what happened here where there's a nice substantive difference between what happened here and the liquid in the liquidation and there is no substantive difference under this court's test and sloan this transaction lacked economic substance  because there was no purpose for it other than tax avoidance and because because it offered no economic benefits other other than the tax benefits that it and he was as the seventh circuit concluded in the feldman case and the eleventh circuit recently concluded in the shockley case talking about with the wisconsin u f t a those courts said that there is no meaningful difference between the substance over form principles that wisconsin applied under the wisconsin you have today there's no difference between substance over form and that context in the federal substance over form that for example this court applies and plight and sloan and the same is true under the ohio that state law poses liability for the entire tax debt west sides entire tax debt up to the amount of money that mr carter received from one side through this transaction and so if that amount of money where the interest which is part of the federal interest which is part of the federal tax debt whereas here the amount received was enough to cover all of that then the state interest provisions just don't come into play but we have a simpler version in this case reach the merits of that issue before but there was the adelson case where the court acknowledged that standard so you're saying we can if if we need to publish in this case on this very exciting issue that this would be the opportunity for a court to do it  just under a minute but just briefly your honor to respond to mr carpenter's comment about every transfer case involving someone's taxes someone else's taxes that is certainly the case but every economic substance case where the government wants to disregard or reca transaction involves this taxpayers intent and under this court's cases in sloan and case here and the other cases this tortoise decided there must be a showing that this taxpayer mr to card she had the intent of avoiding income tax and all of those cases if you look for example at the case there the transactions projects would generate a ten thousand dollar loss absent taxes if you completely ignore the taxes and follow the path the government says mr  charge he had to do which is reserved for tax for continued tax liability ten to twelve million dollars mr carty still would have made an economic return of the north of twenty million dollars in this case contrast that with case b or where any way you cut it the taxpayer was going to lose ten thousand dollars if you get the taxes out so here i think it's just very different from every other case has been decided under the economics of this doctrine in this court where it can't be said that there was any intent to do anything other than save taxes here there are more than twenty million reasons why mr pickard you wanted to sell a stock other than taxes not was to make an economic return a long term economic return on his investment in west side so with that my time is up and i will submit