Toyota Town, Inc. - Page 15





                                       - 15 -                                         
          of surprise and the need for additional evidence on behalf of the           
          party opposed to the new position.’”  Sundstrand Corp. v.                   
          Commissioner, 96 T.C. 226, 347 (1991) (quoting Pagel, Inc. v.               
          Commissioner, 91 T.C. 200, 211-212 (1988), affd. 905 F.2d 1190              
          (8th Cir. 1990)).  Because the parties agreed to submit these               
          cases fully stipulated, respondent made his decisions regarding             
          what evidence to proffer on the basis of the pleadings and the              
          stipulations, including the stipulation that the amounts paid to            
          Western General were “properly” included in petitioners’ income.            
          To be confronted with this new issue after the evidentiary record           
          is closed is prejudicial to respondent.  Accordingly, we will not           
          consider whether the amounts paid to Western General were not               
          includable in petitioners’ income on the basis of the “claim of             
          right” doctrine or income attribution principles.  Instead, we              
          shall consider only the issue that was properly raised; namely,             
          the appropriate period for deducting the amounts paid by                    
          petitioners to a third-party insurer to assume petitioners’ risks           
          under the EWA’s that petitioners sold to their customers.                   
          II. Proper Period To Deduct Amounts Paid for Multiyear Insurance            
               A. Petitioners’ Arguments                                              
               To support their position that respondent’s determinations             
          are erroneous, petitioners argue that respondent abused his                 
          discretion by requiring petitioners to change their method of               







Page:  Previous  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  21  22  23  24  Next

Last modified: May 25, 2011