-191-
Nor does the complexity of an issue, or the fact that an
issue may be novel, play any part in our determination of the
proper standard of review. Many determinations of fair market
value involve novel and/or complex calculations. Moreover, as
generally agreed upon by the experts, the valuation issue at hand
as applied to plain vanilla swaps, the principal financial
derivative in issue, is not that complex to a person familiar
with the industry.
We also disagree with petitioner that the lack of
regulations on the valuation of financial derivatives entitles it
to prevail under a reasonableness standard. Petitioner notes
correctly that Congress authorized the Treasury Department to
prescribe regulations under which financial derivatives would be
valued and that the Treasury Department has yet to do so.
Petitioner also notes correctly that both this Court and the
Court of Appeals for the Seventh Circuit have previously
criticized the Treasury Department for failing to prescribe
congressionally mandated regulations. E.g., Pittway Corp. v.
United States, 102 F.3d 932, 935-36 (7th Cir. 1996); First
Chicago Corp. v. Commissioner, 842 F.2d 180, 181-182 (7th Cir.
1988), affg. 88 T.C. 663 (1987); Estate of Maddox v.
Commissioner, 93 T.C. 228, 233-234 (1989); First Chicago Corp. v.
Commissioner, 88 T.C. at 676-677; Occidental Petroleum Corp. v.
Commissioner, 82 T.C. 819, 829 (1984). In each of those cases,
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