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tax benefit rule, respondent has not raised a new matter for
which respondent bears the burden of proof. Colonnade
Condominium, Inc. v. Commissioner, 91 T.C. 793, 795 n.3 (1988).
We accordingly reject petitioners’ attempt to limit our
consideration of the applicability of the tax benefit rule in the
instant case.
We do not find merit in petitioner’s reliance on Schuster’s
Express, Inc. v. Commissioner, supra. In Schuster’s Express the
taxpayer maintained insurance expense accounts on the basis of a
predetermined percentage of gross receipts and deducted the
amount so computed even though its actual insurance expense was
less than the estimated amount. The difference between the
estimated and actual expense was credited to a reserve account.
The Commissioner disallowed the deductions claimed for the
amounts credited to the reserve account in the taxpayer’s open
years and sought, pursuant to section 481(a), to include in the
taxpayer’s income for the earliest open year the balance of the
reserve account as of the end of the preceding year, which
comprised additions made in closed years.6 The Court found that
the applicability of section 481(a) constituted a new matter for
which the Commissioner bore the burden of proof, stating:
[the Commissioner], the party on whom the burden of
proof rests, has not established that under * * * [the
6 Sec. 481(a) permits the making of an adjustment with respect
to amounts that were omitted in closed years. Graff Chevrolet
Co. v. Campbell, 343 F.2d 568, 571-572 (5th Cir. 1965).
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