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with that court's opinion, Lewis v. Commissioner, 18 F.3d 20 (1st
Cir. 1994). Respondent seeks to amend her answer so as to raise
for the first time before this Court the affirmative defense of
quasi-estoppel, also known as the duty of consistency.
Petitioners seek judgment as a matter of law on grounds that
respondent has untimely raised such affirmative defense. For the
reasons set forth herein, we grant respondent's motion and deny
petitioners' motion.
Background
Our initial opinion in this case, filed at T.C. Memo. 1992-
391, dealt with Alan E. Lewis’ (petitioner) involvement in a
series of complicated loan transactions throughout a 10-year
period ending in 1984. These loan transactions involved domestic
and foreign corporations, partnerships, and trusts in which
petitioner maintained ownership interests. The series of loan
transactions culminated in 1984 when a foreign corporation
controlled by petitioner indirectly transferred $1,062,500 to a
trust also controlled by petitioner. Petitioners did not report
the $1,062,500 transfer on their Federal income tax return for
taxable year 1984; petitioners did, however, report interest
income from the trust. Respondent determined that the trust at
issue was a grantor trust and the $1,062,500 was income to such
trust. A deficiency noticed followed.
Petitioners advanced three alternative arguments in their
attack upon respondent's determination. We analyzed petitioners'
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