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section 2057(b)--the same section upon which the parties have
focused their dispute from the beginning of this controversy.
See Smalley v. Commissioner, supra at 457. At its core, the
notice of deficiency denied the estate the deduction because it
failed the 50-percent test under section 2057(b)(1)(C). The
parties have been arguing about whether the estate’s corporations
pass the 50-percent test from the outset. Respondent’s argument
does not raise any new issue that should have surprised the
estate in any way. We conclude that respondent’s argument
applying section 2057(b)(1)(C) does not prejudice or surprise the
estate.
VI. Conclusion
The estate has conceded respondent’s argument that the
estate cannot meet the requirements of section 2057(b)(1)(C) even
if the adjusted values of the two corporations are aggregated
and therefore does not qualify for the qualified family-owned
business deduction under section 2057. The actual stipulation
that the parties entered into did not establish that the estate
satisfied section 2057(b)(1)(C). Therefore, the stipulation
contradicts neither respondent’s argument nor the estate’s
concession of his argument. Finally, the fact that respondent
raised his argument for the first time on brief does not prevent
us from considering it because it simply applies the correct law
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