- 19 - With respect to petitioner's argument that she qualifies under section 1.469-5T(a)(4), Temporary Income Tax Regs., supra, respondent contends that petitioner failed to raise this argument in a timely fashion. Respondent argues that because no discovery was conducted with respect to petitioner's participation in her accounting partnership, undue prejudice would result were we to consider this issue. Respondent also maintains that, even if the Court considers petitioner's argument, petitioner has failed to adequately substantiate the requisite hours in the condominium hotel activity and in the accounting partnership activity. It is well settled that we will not consider issues raised by parties when undue surprise and prejudice would result. Seligman v. Commissioner, 84 T.C. 191, 198 (1985), affd. 796 F.2d 116 (5th Cir. 1986). While petitioner's pre-trial memorandum broadly argued that her activities constituted material participation under section 469, petitioner introduced this particular argument during closing arguments. We note, however, that the notice of deficiency characterizes petitioner's condominium rental activities as "passive activities" under section 469. Moreover, respondent's pre-trial memorandum argues that petitioner failed to meet each of the seven tests contained in the regulations, including section 1.469-5T(a)(4), Temporary Income Tax Regs., supra. Petitioner reported her accounting partnership activities on her returns, and respondent was well aware that the only issue in this trial was whether petitioner's activity constituted material participation in the ownership ofPage: Previous 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Next
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