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of judicial discretion in determining whether considerations of
surprise and prejudice require that a party be protected from a
belated confrontation that precludes or limits his opportunity to
present pertinent evidence. Ware v. Commissioner, 92 T.C. 1267
(1989), affg. 906 F.2d 62 (2d Cir. 1990).
Respondent’s reliance on Brown v. Commissioner, T.C. Memo.
1979-443, is misplaced. In Brown, the taxpayer was not given
notice of the Commissioner's change in theory, and was thus
denied the opportunity to prepare an adequate case on the new
issue. Brown is distinguishable from the case at hand. We have
given both petitioner and respondent the same opportunity to make
their arguments on the de facto liquidation issue by way of
supplemental reply brief. Thus, neither party is advantaged or
disadvantaged.
Respondent maintains that, if petitioner had raised the de
facto liquidation issue earlier, respondent would have had the
opportunity to provide evidence on: (1) Whether WSAI was formally
dissolved; (2) whether the corporate records established a plan
by the shareholders to dissolve WSAI; (3) whether WSAI continued
to hold title to the land underlying the condominiums, or any
other property; (4) whether WSAI continued to manage the common
areas of the condominium complex; (5) whether WSAI continued to
file tax returns; (6) whether WSAI continued to comply with
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