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tions at issue. Petitioners did not claim at trial that they
were surprised by respondent's position under section 72(p)(3).
To the contrary, petitioners' counsel, Mr. Rice, made reference
to respondent's argument under section 72(p)(3) in his closing
statement after trial. Although petitioners were not surprised
at trial by respondent's position under section 72(p)(3), that
position nonetheless constitutes a new matter requiring the
presentation of different evidence which was not raised in the
notice and on which respondent has the burden of proof. See Rule
142(a); Seagate Tech., Inc., & Consol. Subs. v. Commissioner, 102
T.C. 149, 169 (1994); Achiro v. Commissioner, 77 T.C. at 890.
The Tax Reform Act of 1986 (1986 Act), Pub. L. 99-514, sec.
1134(c), 100 Stat. 2484, amended the Code to add a new section
72(p)(3), effective for loans made, renewed, renegotiated,
modified, or extended after December 31, 1986, 1986 Act, sec.
1134(e), 100 Stat. 2484 (1986 Act effective date provisions).
Respondent contends that the 1982 plan loan was modified in 1991
by the 1991 settlement and that, consequently, the 1982 plan loan
falls within the 1986 effective date of section 72(p)(3). In
support of that contention, respondent asserts:
When the plan was examined in 1991, the settlement
agreement called for the terms of the original [1982]
6(...continued)
(II) such loan is secured by amounts attributable
to elective 401(k) or 403(b) deferrals (as defined in
section 402(g)(3)).
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