issues before the court the amount in value of certain omitted assets that were left off the estate tax return the value of certain preferred stock and whether or not the fraud penalty applies to some or all explain that there were fourteen million dollars of assets that were not disclosed on the return at all totally omitted in the case got to the tax court the first time the court determined that there were not fourteen million dollars  assets but there were four and a half million dollars of assets consisting mainly of gems jewelry furniture and music collection just those four categories when the case first came to this court it was sent back on the basis that there were inadequate findings to enable a court to make an appropriate review this court requested the tax court to make specific findings on what you'll need last that's were in their valu assets it had no moral needed assets to claim and started going to other things that were disclosed assets that appeared on the return coins i do have a question about that since with their hi fi it would seem that there was at some point in a out of that was a diary or there was something where one of the daughters referenced approximately five hundred coins correct yes there was and then what was actually in court but there it was thirty one last and that that that you would say would be accounted for i couldn't the court look at say alright you know i think when you put the five hundred down there that you know what you're talking about and i've caught you in what i determine to be a lot of other four misrepresentations or fried and say i just and the coins are not it's there are worth thirteen it's the total amount some might four hundred seven thousand dollars i mean that's a lot of money why couldn't the court state based on other credibility issues and the fact that it was written down at five hundred even though it isn't accounted for in the way that you're pointing out here i still think that there are five hundred and they've got thirty one hundred somewhere else or there's i think there's this person goldberg who he called into question something about the credibility there why couldn't and he didn't testify right  say about the coins mr goldberg justified that first he's a great job at the auction that he didn't lose in the litigation that we did and that all of the points that he had were have located two coins were sold and were sending of the proceeds and those proceeds were reported on the tax return and we have found a few additional coins which will be delivered to you and those who are reported on his return in light of the fact that that indicates that that might be more coins nobody raised during the course of the entire trial every point was either stipulated to or part of the competent collection or part of what they call the additional coins of thirty eight coins there was absolutely nothing indicating that there were any queens missing and out of the blue the court comes up with thirty one coins purportedly was four hundred twenty five thousand dollars never was handled at the trial of than sitting there is an offhand entry in the diary six months prior to that you in addition there were items that we've spelled out that appear to be double counting for about two hundred seven thousand dollars and then we gave as an example the valuation of a five point twenty two carat diamond event all together it's three hundred sixty thousand dollars worth but you're buying all three of them so you can have the three hundred seventy five thousand dollars the court assumed that the three hundred sixty thousand dollars was an appropriate price compared to one of the three diamonds purchase and couldn't the comparison came out with a valuation of this particular nine that's takes us down from a four and a half million dollars to about the two million dollar range that's confirmed when we come up from the bottom page thirty nine assumes that every omitted asset is claimed by the government was omitted despite the fact that a lot of these things were purchased for five years before death and put on the exact value is found by the court if we take that approach which is i think it's thirty nine of the brief we get to two million thirty seven thousand dollars that's four and a half million dollars people for page forty two grief has a similar analysis this goes back to the purchase of everything from the two main sources lloyd's and main these and if we add all those in and make a couple of adjustments which are spelled out in the argument we only get two million retention letter to the clients and it was this close verbal of this return is going to be odd and there was no possibility here or likelihood that things were going to slip by the taxpayers had full compliance that keeping in mind that the tax court found friday children intent in the taxpayers under valuing the sterling stock based on i think there are several things that i would result in millions of dollars in presents with that in mind what's your best argument that it was clearly erroneous with respect to the broader issue first the analysis was done by the accounts they were aware that the preferred stock which by the way it was three million dollars out of the thirty one million dollars purchase was the tip of the consideration paid from the sale of proper electronics to sterling the shares place accountant bates went and got the financial statements they showed that there was a deficit net worth of five point three million dollars at the end of one thousand nine hundred two in other words the obligations were five point three million dollars greater than the assets on the book cent approximately half of the twenty four million dollars of debt more interest rates in the thirteen to fourteen percent range all of those items led miss bates the accountant and her partner logan to believe that the preferred stock wasn't collectable they disclosed that on the return they showed the preferred stock they had a two page attachment which explained all the reasons i went through the attached all of the relevant documents the four hundred eighty two thousand dollars that you just referred was disclosed the estate tax examiner at the beginning of the estate tax audit with the documents that led to it the estate tax examiner just pick that number up no discount for time value of money no discount because it can't be sold no discount for collectibility use that number in wrote it with the presumption of correctness in the valuation of any kind we feel that there are several cases that have said where there is a valuation difference case in the fifth circuit with the stock wasn't even disclosed on the return and the court said even assuming that the stock had substantial value we can't find fraud when there's a valuation dispute in this case there was a serious question  this preferred stock never had any value and never would have any value fully disclosed fully analyzed by the accountants and therefore we feel that there certainly is no fraud penalty justifiable on that similarly with respect to the go the dispute revolved as take any temporary battle i say five minutes and i'll use a little the five right now i think with the gold coins there was no question of what the coins were that were listed on the return coin by coin nomination the year the value the only difference is related to the standard evaluation of the estate value of the coins based on the premise that there was a binding agreement to have those coins optioned a month later in a down market was disclosed in the returns that was the standard it was used it was also disclosed that the state had been successful in getting the auction postponed under an economic downturn clause in the auction agreement the government in its memorandum trial even acknowledged that if that standard was correct the three million four hundred fifty one thousand dollar value was all right so the court said that's the wrong value we can't assume a forced sale we have to at the moment of that and you don't look at what might happen in the future might have even had a different result were not challenging the valuation when there's enough support for what the court did and terms of value but we do submit that for fraud penalty standard was disclosed there's a difference in it legal standard it's certainly not fraud thank you good morning they please the court randolph harder for the commissioner it's tax court on remain and follow this court's directions and provided a thorough explanation of its findings with regard to the unreported assets and with regard to the stock valuations and those findings an explanation are fully supported by the record with regard to unreported assets the court was in that particular case and painstaking in its explanation of what items should have been reported on the return all five hundred of them and that i mean a thirty one this inquiry and says that were are worth a lot of money you know what is there in the record that led allow the court to say there were five hundred only the diary entry and a finding by the court that underlies the entire opinion and that is that the co executors have no credibility the tax court made that very clear and the taxpayers spent the court simply did not believe the co executors and if it found a piece of evidence regarding certain values and certain assets it did not give them the benefit of the doubt and i cannot say that they earned the benefit o one party simply would not accept the fact that the assets even existed and but there were the receipts in the many from amy and from lloyds and the taxpayers explanations seem to be  counsel yes i would like to turn your attention to the question of the valuation of the preferred stock i think i think we all know it but it could no no not exactly that arguments of the parties in the tax court considered that specifically said that a hypothetical buyer it thought would not require a great discount for risk because of the  financial position of sterling holding company the tax court in its original pena and went through the fact that the company was showing a profit it had net positive income positive cash flow rather in each year more expert testimony such the government well one thing to keep in mind of course is that the twelve percent twelve and a half percent discount rate used by the tax court is an annual discount rate and the three percent discount and notes that the government's position is can be achieved by using a nineteen point four five annual discount rate and the full effective discount is thirty three  stock for because of course the stock didn't trade in fact it's not really stock so much as it is part of a contract by sterling to pay these proceeds and it had the funds to prepay the proceeds and the tax court was completely correct in citing the sterlings determination to meet its contractual obligations because in ninety three and ninety four the sterling really sought refinancing and put its best efforts into paying these hundred ninety two the day that to see the year the decision died and so another thing is that this this court observed what the tax court had written about rejecting the taxpayers i compared their company an issue with companies that were in bankruptcy they just were not parallel situations and so they were the value that was reported on the return the value that was promoted by the taxpayers in the tax court was not justified in addition to the it's true that the the commissioner is basically left with the redemption that was actually paid by by sterling in each circumstance each case i think has to be addressed on its own merits and even shackleford with a fifty percent discount that's not a whole lot greater than the thirty three percent discount that is effect and finally regard to fraud the tax court correctly upheld the commissioner's imposition of fraud penalty the decision purchased millions of dollars worth of gems and jewelry and not and  for other gifts executives withheld acorn appraisal from their accountant a very important going to prison but any appraisal would perhaps be of the important they allowed an absurdly low value for the sterling stock of ten dollars a share to be reported on the estate tax return they caused a baseless claim of almost one half million dollars to be listed on the estate return as a liability they did not cooperate with the i rest in the safe deposit box where valuable gems and jewelry were found had to be seized by the i r s before its contents were revealed and it was acknowledged that those things existed all of these facts point toward fraud and support the tax court didn't have all the information correctly and that she did not have a claim as she went as far as suing the estate for to be compensated for that and the claim was was basically acknowledged to be  i believe that all or most of that had been determined i believe that the lawsuit had been dismissed as trumpeters lawsuit had been dismissed at that time and there was a liability everything else that she asked for well over one hundred pages from the accountants her only complaint was it took over sixty days in the time i first asked for it to get it that was the only complaint of lack of cooperation ignition by the executors they believe that by reason of having the c v to give prior to death that these items were not taxable they were wrong they were told they were wrong before the tax court petition was file as you can hear us i already know what you look like now  the tax court petition every pleading and even opening statement by their counsel acknowledges these items are all taxable the only issue that was out there all related to an appraisal was used in an effort to the lane the auction of the gold coins the appraiser said if you can hold these coins for an indefinite period of time it could be five years it could be ten years it could be longer they're going to have a lot of value i think he was up around eight million dollars but if you sell these coins now in this market is three and a half million dollars that's nothing other than a standard of appraisal dispute which the court resolved against the taxpayer four hundred eighty six thousand dollars obviously it's going to get scrutiny on audit the account and said we know that mr trump and we conceal coins during the course of the divorce from everything i've seen it appears that more coins were concealed in monies owed t mrs trotter her daughter said what any daughter should say is if we are our mother money find out the right amount and we'll pay it before they had a chance to pay it all of the chaos broke loose with a jeopardy assessment for some twenty two million dollars which was above and beyond anything that these girls had access to and they didn't pay it when they paid it to date or not i don't know but it's probably not so with that i do appreciate