off with the practical consequences of the outcome of this case in other words why does it matter whether whether penalties are determined at a partnership level or a partner level proceeding and i'd like to suggest there federal claims and we would have no way of knowing that the court of federal claims would construe the mandate so narrowly the but then they just didn't judge williams just follow what partnership item but that it remanded the case to see elf to ascertain whether there was some other partnership item to which the penalties related and we suggest suggested several partnership items namely the including the economic substance of the partnership transactions or the economic substance of the spread transactions and the sham nature of the partnership there's nothing in the statute that sa that the penalty has to directly relate to and it just meant a partnership item it simply says that the penalty has to relate to a partnership item so it's our position that even  though the penalty here is may be several steps removed from a determination that the spread transaction lacks economic substance the penalty still does relate to the meaning relate to the partnership item and it's our position that congress intended a broad interpretation of the one nine hundred ninety seven amendments to the code because it wanted to eliminate the multiplicity of proceedings that resulted when partnerships items and penalties were determined in individual partner level proceedings and it also stated in the legislative history that the relevant conduct also but you know generally occurred at the partnership which is certainly true here here that that the tax benefits never could taken it into account for basis purposes for a partnership so unless you transfer an asset with a corresponding contingent liability to a partnership you don't get the stepped up basis of the this whole partnership needed as a the whole the whole tax benefits of about forty five million needed the partnership for the or they could never claim the benefit they they could do offsetting offset in euro auctions on their own any time they wanted but you know they can't get a fifteen million dollar write off a piece without the partnership form and it's exactly that type of situation that congress was concerned about  we have not we have not done so your honor it can it's our position that there are partnership items in this case namely the lack of economic substance and the sham nature of the partnership that the penalties relate to an adjustment of these partnership items and there was nothing in this court's prior opinion that expressly or by implication rejected arguments this court explicitly referred to outside basis and explicitly stated you know that the penalties that out since outside basis with affected item that there was no jurisdiction over the penalties or unless you know the penalties didn't relate to a partnership item and never really considered you know the the question the question whether the penalties related to the economic substance of the partnership item so i would suggest that there is room in that you know in the courts that this this court would not be acting inconsistently with this prop with this prior opinion if it were to determine that the penalties in this case related to a partnership item  economics of sense of the spread transaction or alternatively the sham nature of the partnership that it could you know make that determination and still be consistent with it prior opinion in  trading this this opinion this this case has several practical consequences the primary consequence in addition to resulting in a multi partner level determinations are required different factors are considered in determining the penalties depending on whether it's determined that a partnership level or a partner level proceeding for example if it's determined at a partner level proceeding the negligence it's an issue as to negligence of a partner if it's determined in a partnership level proceeding the negligence is that i determined as the partnership negligence and also the timing of pain that assessment payment is different to pet it is different depending on what level they're determined to out for example if tunnel confrontational and just the taxpayer will have to pay for that conclusion at the partnership level proceeding if however you know it has it goes to partner level proceeding then after the you know be considerably postponed and it may well be that that's really what's an issue and why the tax payer you know that may be with really an issue here in the woods time is money problem to the government depending on you know for example with this court hauled that the you know that the part of the proceeding that they have to be decided in a partner level proceeding are all of these arguments raised last time i was here i was the only one who wasn't my colleagues for here well the best term and the practical consequences we did not discuss that the first time around they were not discussed in terms of within your brief as they were not in our brief the first time around and terms of what difference it may you know the these issues were not in their brief the final consequences that if court this core hauled that up you know it has to be determined in a part of a proceeding the taxpayer could receive you know bring this case you know in a in a different form subject to this court's determination if that court halts its a partnership proceeding that has to determine the penalty then our time for assessment would have expired then we would be out of  and we certainly are here to answer whatever questions you may have we think three points largely disposed of this case one no case that we can envision or fin technicality based on an issue that wasn't fully raised in the privacy actually that they they paid them and so there's not a mouse so they're looking for a refund well we were actually looking for partner level proceeding we'd like to handle it all in one place the course that the government merges those two things it creates yet a third or fourth proceeding depends if you view the partnership is one there w be under the government's view a refund action and in effect an item action under our approach we would get to go to one proceeding and for the first time after what's probably going to be fourteen years have sacked explain why we don't owe the penalties why we were not negligent while we were we had reason also our ultimate goal as we discussed with the two of you in the first panel was let us address reasonable calls in the same proceeding it's we're being accused of lacking reasonable cost government i've had a couple son abbas cases that's going to be a pretty tough burden is it to save we were in this  with their eyes closed and we didn't do anything wrong we were in this with their eyes wide open if you had to go through the detail findings of judge williams and in the parsed opinion we are anxious we think one of the reasons we're being delayed is far more those facts wrap winding up in a published opinion which you judge williams did discipline job of going through every conceivable step they took to make sure they're right and we're anxious to have all of that considered as soon as possible now looks like it's going to be about fourteen years after the fact before we are allowed to explain why we have reason to call his posts are lacking in ordinary care that that's our motivation second think of a point that we think is is so important here is that the court was correct when it handed down its mandate the first time instead you look to the government through years of litigation three weeks of trial they pressed one point penalties on outside basis this court was correct in saying that must what that is a penalty you're asked to during the blitz ability  find out or not there was no ordinary care or absence of ordinary here we may have it some may say from it from a distance if it fights some of these cases where people may know real employer didn't have three or four people foreign flicking at it they would have a problem our our our efforts are already cured sort of we'd like to point out that judge williams in this most recent opinion went to great care not simply to track a penalty when you're told jurisdictionally you cannot determine the tax efficiency till the conclusion of the partner level affected i don't it's not mathematically possible and then we get this kind of innuendos and i think i've heard it i think i've heard of arm statement on on on opening argument the timing of the assessment is different to what does that mean there are three stages in dealing with  partnership proceeding stage which we're in now there's a kind of universal joint the confrontational adjustment stage section sixty two thirty operates like of a computation judgement then there is where there penalty based upon the disallowance of the outside basis and the law was created by that outside basis both full or book for that effective i don't proceeding  conducted before and without the supervision of any judge they just trip but that's the difference in time that we're talking about that so you would use or patient of jurisdiction that gives us such great concern that is the thing that keeps us to remain a jurisdictionally true on to the proposition that the partnership proceeding is to do with partnership conduct we would ask that you reply upon judge williams findings that there is no allegation of partnership level of misconduct one of the peculiar things that you get from the government's allegations and in their briefs is a are you now after the fact after the three week trial we're going to say  and after want to pay you that the the penalty are be applied contributions there is no penalty contribution adjustment in the final partnership administrative just been adopted by the government and partnership return the government's problem is not with the treatment of those items on the partnership return the government's problem is the treatment of outside basis on the individual partner's return so in effect the woman says  want to impose accuracy related penalties on the partnership for reporting something well accurately the accuracy related penalties designed to punish inaccuracy when  certainly if you having questions we'd love to have an opportunity to address some of above all else we say that the law of the case tells us intel's other lead against it it should protect you from having to deal with this today should have protected that partnerships argument that the ets or the partnership return was accurate it's a red herring penalties are always three imposed at the individual partner level they are never imposed at the partnership level so it matter if the partnership return is accurate putting aside the sum of boss case because penalties are never imposed at the partnership level opposing counsel objects to the multipl proceedings they object to this you know pay first litigate later policy that was adopted in one nine hundred ninety seven this pay first litigate litigate later  it applies in general to the litigation of penalties it is it is not peculiar to sun abbas cases if this was a case where egregious losses were claimed on the partnership return and then you know taxpayers claim their proportionate share i believe even tax payers council would agree that penalties were determined that would be determined at the partnership level in that case the taxpayers would be it's our position that there is no such exception yes the government is is claiming in this case that following the conclusion of partnership proceedings we would you know as regulation three zero one point six two three one a six dash one t a two which was the applicable regulation in the in the period in question and it basically says that a penalty related to a partnership item may be directly assessed after can after the conclusion of partnership level proceedings even if partner level proceedings are needed to determine the tax  finally as we stated in our brief the tax court or the court of federal claims has no jurisdiction in a partnership level proceeding to compute the amount of underpayment to determine the under payments that is determined the court in a partnership level proceeding has jurisdiction to determine partnership items and the applicability of penalties that relate to adjustments to partnership item so the fundamental error that the court committed is say how the government has been shown to me you know the underpayment how do you compute the underpayment well she had no jurisdiction to determine any partner level underpayment could only be determined in a partner level proceeding and that is true regardless of whether you're dealing with outside basis or we whether you're dealing with agree just losses claimed on a partnership on a partnership return so it's our position that the court below heard in concluding that the penalty had to relate directly to a partnership i don't and the court also heard in