issues before the court simply want to jurisdiction and that turns on whether the shepler's claim for a refund was time there is no dispute in this case that for the two thousand and two tax year shepler's over paid their tax liability by a little more than five million dollars the only question is whether the refund claim is timely in their under the three year general period three years when the reversion return was filed two years from when it was paid or ten years under the special rule for refund claims related to changes in foreign tax credits that's the only those are the only issues timely or not starting with one of the key authorities will help explain why scheffler believes that it satisfy both the two as well as the ten year rule for claims attributable credit is treated as a payment of taxes and i decided both by district court is one of the key authorities disagreeing with dresser another district claim for seventy one or three sixty eight seconds to eighty one just for ease of reference in kingston the taxpayer in that case was subject to income tax and excess war profits tax the korean war profits contractor had to repay the government on lower renegotiated prices but in the enron that taxpayers may have actually paid its on those excess profits and so it 's set up a interesting question that the court face and alternately upon return payment of excess profits to the government the taxpayer claimed a refund but how this came about is really critical and it really sets the stage for understanding kingston the to your payment rule in ultimately the alternative minimum tax and how it's different in why it's distinguishable from those case seven those prices charged to the government re negotiated in kingston and made a payment to the government for the excess prices instead of  doing what it was legally entitled to do reducing the pain meant in not hundred fifty seven by the amount of taxes paid not to fifty three that paid the full amount they didn't take any reduction for the taxes they had paid and then later they file the claim for refund asking for those taxes on that repayment back reaped fund claiming not to fifty seven taxes paid n fifty three you're beyond the normal three here and the question was is it time and it's important that the court in that case at the outset thought it was critical to make a very important thinking at this point alternative minimum tax which is involved in our case a separate alternative that says likewise when the taxpayer in kingston read pay the excess prices to the government not think that the seven the court of federal claims went out of its way to say that repayment did not create a credit a tax credit for the taxpayer again that's at pages two eighty six to eighty seven so it's set up and along the way it said and drop that note this is different than the world war two excess profits the in my over simplifying to say your basic proposition is that when you have a credit that's carried forward to offset that in your mind is a refundable payment is that the proposition you minimum tax isn't under six so isn't listed under sixty four zero one i mean i appreciate you sending up this paradigm but don't you lose on both issues that if it's not a pain it is a pain i know but if it's not you they've asserted this as an answer to the sixty five eleven i don't see why if you were wrong as to a payment it wouldn't also mean the government would prevail on sixty five eleven d no sixty  form of the alternative minimum tax it did two things it created the minimum tax credit and it also created a system where you have a regular income tax and you have an depreciation accel of the rate of depreciation instead of stock options things that don't create either reduce or don't create ordinary income tax under the alternative minimum tax they do there's a timing question because of regular income tax reverses over time and the minimum tax is a minimum tax it's not designed to increase your normal income tax liability affectively the minimum tax credit represents the timing the overpayments the prepayments of the ordinary income tax so they are actually payments of ordinary income tax that under seventy four twenty two that's where those one allows are deemed payments but i think i'm understanding my i guess i'll tell you my difficulty with your brief is that unless these two connect sort of nine tenths of the brief was devoted to your woods argument and defining what's attributable to this is the last two pages is as i understand it but is this your principal argument the sixty five eleven credit equals payment or are you also arguing satisfy both the minimum tax credit represents a prepayment or overpayment of regular income tax is a separate system and under seventy or twenty two when allowed is deem it's important to understand how the minimum tax credit works affectively in the alternative minimum tax effectively if your regular income tax is too low in your minimum taxes higher you pay the minimum tax to the extent that that difference is due to its high issues it gives rise to the payment of the alternative minimum  rise to the minimum tax credit carry forward which can be carried forward in definitely by statute goes forward for ever in our case in two thousand and two the district court said oh you have these foreign tax credit adjustments they would have simply increased your tax liability and your regular interest tax what happens under the minimum tax credit system your income tax regular income tax liability goes up computationally it allows you to take that read so we believe as in woods where the court drew a direct line from the sham partnership argument to there's no outside basis to the gross valuation misstatement penalty applies because outside basis is overstated by four hundred percent or more so you have this direct line of cause they prior to the supreme court decision woods this court stopped sam transaction you don't go to those next steps you don't go to outside how do you compute outside basis is or outside basis is that outside basis over state about four hundred percent or more you just stop the you are over saying he's here there is likewise a direct line  the foreign tax credit adjustments increase taxable income that creates reverses the timing issue allowing for the utilization of the minimum tax credit and is the direct line of causation similar in to woods where you go from a sham to outside basis to the computational question about sybase is overstated by four hundred percent or more here we go for a foreign tax credit adjustment impact your regular income tax liability increasing a minimum tax credit is allowed because that increase in  like ordinary income tax liability allows for the offsetting the tax liability with the minimum tax credit which by the way the minimum tax credit is sells is impacted by the fo two thousand and one tax that you problem emmet to a twenty two well you had back credit a year before the foreign tax credit even kicked in or impacted at all yes that  timing there was an additional timing difference and the government calls it a redistribution between what i'm hearing asking you how could it cause directly if before it even existed you already had that credit because it's actually the requirement it's a computational moment but it didn't actually in any way cause the overpayment what caused the overpayment was the entirely separate fact of the a m t carry forward you already had by virtue at twenty twelve twenty eleven that's their argument versus yours i think yes essentially you're on a bike we're saying the chain of causation doesn't start ups with the changes into the ordinary tax liability which is essentially what the district court did they said oh your ordinary tax liability would've gone up no that caused a series of issues that allowed for the taking of the minimum tax credits is like electrolux you say those are those are no longer good law because of woods that they're just distinguish in that they don't take into account would look further at the chain of causation and more importantly there you had just simply a single question of whether a kerry backed term used in the change that that analysis it's unclear we think it's distinguishable because the clearly there the tax payers were trying to read words into the statute that were weren't there but the united states very well may have been different under the court my name is nora bringer and i represent the united states in this appeal to maintain a more workable tax and person system the supreme court explain in broad camp congresses imposed unusually emphatic time limitations for filing deadline for sixty five eleven expired in october two thousand and six but they found the reason claim an issue here in april twenty third two you know six and a half years after that deadline they principally assert that their refund claim is timely under the exception and sixty five causation is in line with this court's decision in stanford in the supreme court's decision in bronstein but as the district court found that the older people at issue here was not caused by foreign taxes the changes in foreign as reported on the amended return it issue here reduced the overpayment by one point six million dollars and something that reduces the overpayment cannot be said to have caused the overpayment the claim that a sort of conceptual though because they didn't do anything wrong they reported as they're required to under nine o five when they could so your theory would be impossible for them to reap the benefit of their a m t credit comply with section sixty five eleven so congress knew that there was a perpetual obligation to report these changes and form taps and the reason for that is that the code allows taxpayers who choose to do this to claim the foreign tax credit in the year in which those taxes accrue knowing full well that those taxes might actually be determined at a later date so here are the shufflers took a bigger foreign tax credit than it turned out they were entitled to and so congress reasonably says you must report those changes down the road whenever they happen but if you're claiming a refund in that region terminations reported on and i don't five see one it must comply with sixty five eleven no they didn't do anything wrong here they didn't do anything wrong and they haven't lost the benefit of the credit carry over which was also legitimate and existed but they did benefit somewhat from it without the minimum their statement that woods has adjusted and loosened the concept of attributable to to mean anything triggering instigating so at nine o five redetermination is the but poor trigger so that's not woods woods dealt with two elements of a complicated tax shelter that the supreme court under inextricably intertwined in a sense two sides of the same question was was not about cascading causation in fact the supreme court toward the end of that opinion specifically says that they are not dealing with a situation described in the blue book which was an issue in that case it's a congressional duck you talk up just a little short so what  specifically says in the end of woods that they were not dealing with two separate causes of an underpayment was the issue in that case here there are two separate clauses of are two separate things is that they changed on their amended return that led to this claimed over payment of five point one million dollars there's nothing in inextricably intertwined about what occurred here so would simply doesn't speak to this argument of what's the best case district or circuit that emphasizes that attributable to really means interlock as opposed to separate and independent is there one and i don't mean to ask too many questions because you're outlines probably more important in my eyes but but you i understood opposing counsel to stu agreed to start with an entirely different approach to this which is in my mind the much harder to understand approach  if you could get to it that would help which is are these credits not payments under kingston or especially with reference to seventy five seventy four twenty two and as you answer that if you were to prevail am i right thinking that that argument would have been successful against that sixty five eleven d argument as well as where you urged it as day you understand and sure and or stand your second if if these offsetting credits don't count as payments and i'm through both flying it that would be a response to both provisions they wouldn't be entitled to a refund under either but as i read your brief you only urge that as to the sixty five eleven a is an initial matter and the tax paid for two thousand and one is irrelevant to the sixty five eleven and also for two thousand and two which is the year at issue here whether or not tax was paid for two thousand and one doesn't really matter for two thousand and two and i'll walk through a few parts of that first there's a little discussion or claim of there being some sort of payment the minimum tax on the two thousand and one amended return as a conceptual matter the alternative minimum tax calculation and the regular income tax calculation are not two separate taxes there are two ways of a raving at the total income there is imposed under subtitle a of the internal revenue code these are not two separate taxes it's not an excise tax an income tax isn't just two ways were writing at the total income tax the amended two thousand one return makes this clear and it's on page one fifty two of the record that amended return shows that no tax was owed all that happened was that the coke you'll ations for writing amount you owe is listed as zero the amount over paid on the return is listed as zero and there's no request for the zero overpayment to be applied to the next year or so so there's no tax paid from two thousand and one and there is no overpayment to be applied to two thousand and two seventy seventy four and twenty two d talks about when the crediting of an overpayment is considered to be a payment here there's no overpayment from two thousand one that's clear from the face of the amended to those in one return all they have is a non refundable credit to carry forward in future years and not refundable credits are not payments of tax that's the crux of nonrefundable credits are not payments he disagrees yes what's the best case that sort of explains what you both are discussing well adn kingston products and republic petroleum talk  about you know when credits are considered to be overpayments home and and they talk about the crediting of an overpayment to a determined tax liability here there's no overpayment it's simply a credit that can be turned forward to future years and if you think about how this entire scheme works it makes sense that a non refundable credit is not considered to be a pain and here's why i did say fifteen years ago i neglected to take the child tax credit on my tax return and today i'm going to file an amended tax return and i'm going to claim the child tax credit and because i now claim to new credit that's a payment and because i that qualifies under sixty five eleven a and the government needs to resign my tax from fifteen years ago that's not how the scheme is set up and there's no case there's no authority there's nothing in the internal revenue code that supports this idea that a not refundable credit is a payment or the seventy port twenty two is in the political it doesn't apply to non refundable credit no no it does not seventy four twenty two zero get it seventy four twenty two d says the credit of an overpayment of any tax and satisfaction of any tax liability and then it goes on from here here we don't have an overpayment there's no overpayment from two thousand and one if there's no overpayment that was credited to there's no evidence of the i r s said ok well you overpaid last year five thousand dollars fine apply it this year there's nothing like that in this case and th there's no credit of an overpayment and satisfaction of any tax liability here they claim that they overpaid their taxes not that the i r s said we're going to take your overpayment from another year and help to satisfy your li right why doesn't that also resolve why do we reach attributable to a causation if the a m t carry forward credit can't be an overpayment isn't that a complete answer to the case or my missing something but your honor their argument about sixty five eleven d i think is a little different ok so they claim that because it's the foreign tax changes were part of the overall calculation of their tax liability that somehow those t changes caused the overpayment and therefore that their refund claim was timely was one overpayment i think i think i see your confusion so there is a difference between claiming that one has made an overpayment and i'll see if i can post those for you because it's it's a little confusing so i'm on the facts of this case which the government is accepted as true at this point you know we're in a motion to dismiss phase here their documents show that they do have an overpayment for two thousand and two of five point one million dollars and assuming these facts are true and they would have the burden of proof meaning once you re computed they just paid too much that's correct and you receive the money that's an overpayment that's correct i say ok i think the other question is whether they filed a refund claim on time to get that overpayment back and that sixty five eleven does not have any exceptions for the minimum tax credit there's nothing in there that says well if you call in if your overpayment is caused by the minimum tax credit increase then you get an extra amount of time here in the overpayment was caused by the minimum tax credit which the government thinks is incorrect but if the court was to accept that then that the analysis of those at the center of electrolux would come into play and the government's position is that it's the direct cause of who are the tax attribute that directly gives rise to the overpayment and dresser dresser is a confusing case i will i will confess that there is this statement in dresser that you know credits are treated like a cash payment and dresser relies on kingston products for that statement and misreads kingston products consumer products says something much narrower than every credit is treated as a cash payment but that statement which of course is not binding on this court is dicta because the district court in that case concluded that there was not jurisdiction over the tax year at issue there because the tax supported already entertained a petition about that y in addition the tax is an issue in dresser had actually been paid as in the tax payer he'd get the money to the i r s within two years of the refund claim or so under sixty five eleven at the refund claim was timely so why the district court got to that issue as puzzling why it made that statement is puzzling but the statement is incorrect ok thank you very much well makes it impossible for the taxpayer to ultimately get a refund when the mall minimal tax credit is allowed to simply speak as what they're saying is you would have to file that refund claim within tax credit represents a timing of difference and at some point it's going to reverse or entitle to take it i mean conceptually that's what the government is saying which is then type that equal to the unlimited carry forward of the minimum tax credit for you'd always have to file a placeholder kind of litigation every time you're in this bucket yes which contrary to what the government says would not make a workable system has a court pointed out that continuity you think this is the first case to my knowledge this is the first time this issue has ever been addressed additionally we're not talking about all tax credits we're talking about the minimum tax credit here which is fundamentally difference because it represents an overpayment of ordinary income tax as a result of timing difference between congress ordinated the alternative minimum tax  ordinary tax alternative minimum tax isn't just increased income tax it is a but a backstop to these timing differences as used here in that time or overpayment government is very careful in its brief to describe the two thousand and one changes as a redistribution of tax between ordinary income tax and alternative minimum time trying to put it in the mold of kingston or kingston that went out of its way to say we are not talking about separate taxes and we're not talking about a payment that gave rise to a credit again the general explanation for the revenue act nine hundred eighty six generally known as the blue book says structure a minimum tax is an alternative system for most purposes the tax base for the new a m t is determined as though the alternative minimum tax were a separate and independent sisk so that the government says it's a redistribution between ordinary tax and alternative minimum tax in two thousand and one what it is is ordinary taxes over paid which triggered additional when the foreign tax credits came in you had to pay alternative minimum and so it is an overpayment there was an actual overpayment of that ordinary income tax in two thousand and one what happens is you carry it forward to thousand s and you have to see is that allowable is the increase in tax ordinary income tax such that it frees up room to take that over paying that of ordinary income tax attributable the time differences under seventy four twenty two we believe that that seventy four twenty two says that credit is deemed a payment when allowed you have to do computations to determine when is allowed those confrontations are a direct result of these foreign tax credit read terminations which changed the taxable mix when the statute says to the extent that the overpayment is attributed to the foreign tax credit to the extent does suggest it wouldn't be the entire amount that's can't be and that's what that under sixty five eleven yeah that was nine tenths of your brief was that yes yes but you get back into the same question of what but you don't doesn't that defeat your argument that the entire amount was caused by the foreign tax credit if the specific language of d says only to the extent that it's attri words the word is all right and on that note we appreciate the excellent arguments from both counsel and we will consider the case under submission