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so that payments for insurance of the warranty risk should be
deemed to have occurred on the first day of the taxable year for
all such payments, regardless of when the payments were actually
made.
Discussion
I. Matters Properly Raised
As a preliminary matter, we must first decide which issues
have been properly raised in these cases. In addition to the
proper period for amortizing insurance expense, which was
challenged in respondent’s determination and was the basis on
which petitioners assigned error to that determination in their
petitions, petitioners now argue, for the first time on brief,
that the EWA proceeds that were remitted to Western General are
not income to petitioners, on the basis of the “claim of right”
doctrine and income attribution principles. Should petitioners
prevail with respect to these contentions, they maintain that
they are entitled to refunds for overpayments in the years at
issue. Respondent objects to our consideration of petitioners’
claims that the amounts paid to Western General are not income to
them, on the grounds that respondent did not receive “fair
warning” of petitioners’ intention to raise this issue.
We believe the inclusion of the amounts paid to Western
General in petitioners’ income is not an issue properly before us
for two reasons. First, petitioners fully conceded this issue
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