- 81 -
the interest of justice will [best] be served by admis-
sion of the statement into evidence; and
5. the proponent of the statement has made it known
to the adverse party sufficiently in advance of trial
or hearing to provide the adverse party with a fair
opportunity to prepare to meet it.[54] [Goldsmith v.
Commissioner, 86 T.C. 1134, 1139 (1986); fn. ref.
omitted.]
The foregoing residual exception to the hearsay rule is to be
"used very rarely and only in exceptional circumstances" to
ensure that it does not emasculate the body of law underlying the
rules of evidence. Id. at 1140.
Petitioner argues on brief that the admission of the news-
paper article is justified because of petitioner's inability to
obtain other evidence showing how common "back-to-back loan
structures" were when Rev. Rul. 87-89, supra, was issued55 and
54 Fed. R. Evid. 803(24) also requires the proponent of the
statement to furnish the opposing party with the particulars of
the statement, including the name and address of the declarant.
55 During a deposition of Henry Yung, an officer of Union Bank,
that was taken by petitioner approximately two weeks prior to the
trial of these cases, petitioner learned that Mr. Yung was not
able to testify that "back-to-back loan structures" were popular
when Rev. Rul. 87-89, 1987-2 C.B. 195, situations (1) and (2),
obsoleted for payments made after Sept. 10, 1995, by Rev. Rul.
95-56, 1995-36 I.R.B. 20, was issued. At about the same time,
petitioner subpoenaed Thomas D. Fuller, an individual who peti-
tioner believed was employed by the Internal Revenue Service
(Service) and was able to testify that such arrangements had been
popular when that ruling was issued. Petitioner learned approxi-
mately five days prior to trial that Mr. Fuller had left the
employ of the Service and was abroad. At the call of these cases
from the calendar, petitioner attempted to offer the testimony of
a witness not listed in his trial memorandum with respect to the
popularity of "back-to-back loan structures", which the Court did
(continued...)
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