their shares as of the first the i r s can examine any form eleven twenty f claiming a section eighty three exemption if it does the taxpayer has the burden of proving that it meets the interested no i mean the burden is still on the taxpayer to prove ownership so if we it's accepted that ownership is possession of bear shares so they are own the issue for the taxpayer in this case with fortune is to prove that they in fact did own th should share it's really a share issued in the name of the shareholder as opposed to in the case of barrett simply issued to bear yes the reform where is a record in the books of the in the company i mean they would be held up as as with any company they would be held in the in the records of the company itself there's no public register as you know here there's no public register of shares and if the in this case a good fortune cannot prove ownership of the shares and residence of the shareholders he will pay tax if the court in nowadays to challenge regulations all that good fortune will have one is the opportunity if your right that the regulation can't be sustained as it is then you already know no we don't you don't take no no no no no i don't think that position all we all are asking is an opportunity to prove that there are qualified shareholders not you're not taking the position that if you were to prevail that those submissions are necessarily sufficient not at all we still have the whole burden and so the where's the sort of limit of the we're still now persuade exists then then we lose and we have to pay tax but you can you appeal in some way the reasonableness of their determination oh i think i'm good oh oh certainly we could go to tax court and say that the position they've taken example we've already provided in this case volumes of evidence about bank accounts loan agreements personal guarantees other in d c of the ultimate beneficial owners of this company but  you don't take the position though that the i r s could never determine that there's a class of ownership i know you think of fair shares for the ring but there's a class of ownership type of ownership that is so difficult to prove that that's just out of bounds or doesn't know what because in this case it seems to me that because the taxpayer has the burden of proof the i r s simply sits back and says because all the i r s has when it examines it every eleven twenty have filed has a schedule ask with a schedule as to page form which is summary in nature indicating the exemption the ownership setter that's all they have they have no way of knowing at that point  whether the shares of the ultimate beneficial owners are held by nominees they're held simply by a straw man they have no way of knowing the form of ownership so they still have to make a case by case examination to determine if the people who are claiming to be ours are truly the owners and indeed if you look at the follow the money rule that it one hundred eighty three days four c four it says even if you have a stock order of corporation issue shares but in fact there's a private agreement that says the money flows to different parties for example through either preference shares through a contract or of agreement we want to know who is getting the money from this venture that is the true ultimate beneficial or i think i'm out of it asking a question of the opposite direction suppose a situation which a country ha allows ownership of shares that are just issuers so there's not a new paper and they just say you know these are basically he shares and they're traded on the market and that's that's our that's how we do ownership and that country says that that's fine and the i r s says now not for our purposes yet that's just not something that is traceable in a way that's going to work so we're just going to take those that class a shares and say you can get the benefit of the exemption if your shares are traded on the non paper market because they guarantee that well i guess i don't see the i don't see the benefit of doing it because this is all a priori before they even get in the exam they're saying but what i'm saying is at the point that the service enters into the inquiry it would be no different if it wasn't a chair is i mean that just makes it sound like your position is that the i r s always has to allow the taxpayer to try to prove ownership even if the i r s has made a determination that there's a type of ownership that's basically untraceable as opposed to go further and they say this is the type of ownership that we began and for the last ten years is just riven with fraud could if the i r s and come to some factual determination based on prior experience that this particular situation then they would have a reasonable basis for going forward because there would be some facts that they could cite to what i'm saying at this point the only thing they said is listen it's clear they don't like shares i'm not here is an advocate for bear shares but what i'm saying is in this particular instance the the hypothetical you posed presupposes the irises already investigated the situations that tended to find out children corporation shareholders the regulations that issue in this case simply say that to determine a corporation's i would you go to the for that exemption the iris must be able to reliably determine the residence of its shareholders in the corporation's books of ownership of the shares and in the case of traditional very sure there's no such record it's just you have to trace determine the ownership of perishers you would have to trace who possessed pieces of paper and given the kind of guys this question that fission degree of reliability and even that is a type of ownership that's just been indicative of fraud before and so we're just not going to allow taxpayers to prove ownership with this particular class and had done the work to show that that might be one thing but as i underst demonstrating the true ownership what if you had that sentence with respect to ordinary shares what if you had that sentence with respect to nominees i mean we had we would you haven't given us any here your brief has arguments but generally means we don't rely on your brief energy actually means we rely on what the agency stated in the regulation and all you said this you think it's yes your number two things about that one is that good fortune that bearish areas have these characteristics that give rise to nothing no i don't think the parties agree that they have those characteristics to an extent that should justify categorically excluding marisha well certainly good for the key difference underlying the two shares i make of that but the mere the fact that there's no record kept contemporaneously doesn't necessarily mean that it's it's reasonable to exempt the entire class it could mean that it definitely could but just the mere don't think that's even that is said actually in the ministry materials i think it's just a fact that everybody understands it i'll take it but that's not said all that said it is ownership it's hard to prove that's correct or on our part for there to a reliable way to demonstrate the ownership of baron shares of the past point in time it would have to be something like what chief judge garland mentioned of someone having a twenty four hour video of a vault keeping would be sufficient to exclude a class of shares the difficulty given by a class of shares that is designed to be anonymous and secret and hidden ownership your honor is i think more than sufficient motos and say that in this very easy to abuse this exemption along those lines yes you are clear imagine that the corporation says these are the bearers and they are residents and the bearers say we are the bearers and they are residents and it's under oath ok bearers to say under oath that you say that's not good enough because they could be from ok with respect to the registered shares you ask the corporation to produce what they say quote are the contemporaneous records but if they were as nasty folk as you've already assumed with respect to the bid to the same companies for their version errors why don't they keep two sets of books and they produce just one set of books which they provide you with says one hundred percent it's possible that they might do that i mean but it's bedrock chevron law that maybe you can see does not have to cut off in this case every potential avenue for abuse of a tax exemption in order cloak over of the transparency of their internal operations that's why they're not public companies so you could make the same argument yes your honor bought to the substantiation requirements in the regulations are themselves designed to get over that don't understand that because they're not legally a different category right it's just a what happens is in order to make use of the exemption the companies have to keep the contemporaneous records specifically by either  amendments kick in and then you know the truth has around two thousand ten regulations however would remain valid at this time because they're not if you ask and what would happen with other tax payers beyond this one beyond this one for y hundred one it simply said documentation sufficient and revenue procedures are actually not binding authority on substantive questions like what is sufficient here there is simply guidance to the taxpayer of the guidance of the taxpayer was that there would be questions no no no thank you very much will take