- 12 - might have greater merit than the primary position of either of the parties, we had them address this newly raised issue in supplemental briefs. I. Lack of Prejudice to Respondent in Addressing Liquidation Respondent maintains that petitioner’s delay in raising the de facto liquidation issue precludes us from addressing it. Respondent relies on Brown v. Commissioner, T.C. Memo. 1979-443, to argue that our consideration of the new issue raised on brief would severely prejudice her case and violate fundamental fairness. We have allowed petitioner to raise the de facto liquidation issue for two reasons. First, just as respondent is not bound by the theory upon which she relied in determining the deficiency, Blansett v. United States, 283 F.2d 474 (8th Cir. 1960), so petitioner is not precluded from raising a new theory on post- trial brief. Ware v. Commissioner, 906 F.2d 62 (2d Cir. 1990), affg. 92 T.C. 1267 (1989) and T.C. Memo. 1989-165 (declining to adopt an ironclad rule that the Tax Court may not consider a legal theory surfacing in posttrial briefs). Our duty is to consider all the evidence, and in light thereof, decide whether or not petitioner has a deficiency. We are therefore entitled to adopt a new theory of decision, especially where we give both parties the opportunity to argue its merits. See Brooks v. Commissioner, 424 F.2d 116 (5th Cir. 1970), revg. 50 T.C. 927Page: Previous 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Next
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