Estate of Charles a. Boratello, Deceased, C. Norman Borgatello and Josephine E. Donnelly, Co-Executors, and C. Norman Borgatello, Successor Trustee to the Charles A. Borgatello Living Trust - Page 8




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            The act of producing the reports to respondent constitutes an                              
            adoption of belief in the truth of their contents pursuant to                              
            rule 801(d)(2)(B) of the Federal Rules of Evidence.                                        
            Consequently, we hold that the requirements of rule 801(d)(2)(B)                           
            of the Federal Rules of Evidence are satisfied and the Cardenas                            
            reports are admissible.4                                                                   
                  The estate vaguely suggests that the Cardenas reports were                           
            provided to respondent during settlement negotiations and,                                 
            therefore, are inadmissible pursuant to rule 408 of the Federal                            
            Rules of Evidence.  Although respondent acknowledged at trial                              
            that there may be some question as to whether the Cardenas                                 
            reports were provided to respondent during settlement                                      
            negotiations, the estate failed to demonstrate that such was the                           
            case.  Consequently, we hold that the estate has not shown that                            
            the Cardenas reports are inadmissible pursuant to rule 408 of the                          
            Federal Rules of Evidence.                                                                 
                  The estate's other main argument against the admission of                            
            Mr. Marx's report is based upon our holding in Diego Investors IV                          


            4     The Cardenas reports are admissible on other grounds as                              
            well.  One significant distinction between expert and fact                                 
            witnesses is that experts are permitted to rely on evidence                                
            outside the trial record.  See H Group Holding, Inc. v.                                    
            Commissioner, T.C. Memo. 1999-334.  The evidence outside the                               
            record may be hearsay and need not be otherwise admissible, but                            
            it can be used by the expert to formulate an opinion.  See Fed.                            
            R. Evid. 703.                                                                              





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