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Respondent argues on brief that, pursuant to the principle
known as duty of consistency, petitioners are bound as to the
amounts of the capital accounts and distributions reported on the
1991 return. We disagree.
A taxpayer is under a duty of consistency when:
(1) the taxpayer has made a representation or reported an
item for tax purposes in one year,
(2) the Commissioner has acquiesced in or relied on that fact
for that year, and
(3) the taxpayer desires to change the representation,
previously made, in a later year after the statute of
limitations on assessments bars adjustments for the initial
tax year. * * * [Beltzer v. United States, 495 F.2d 211, 212
(8th Cir. 1974).]
The duty of consistency is an affirmative defense that should be
raised in pleadings before trial. Sec. 7453; Rule 39; LeFever v.
Commissioner, 100 F.3d 778 (10th Cir. 1996), affg. 103 T.C. 525
(1994). In the instant case, respondent’s answer contained no
affirmative defenses or any allegation that respondent has relied
upon the capital accounts and distributions reported on the 1991
Schedules K-1. Consequently, because the duty of consistency is an
affirmative defense and was not pleaded by respondent, nor tried by
consent of the parties, it is deemed waived. Rule 39; Monahan v.
Commissioner, 109 T.C. 235, 250 (1997); Green v. Commissioner, T.C.
Memo. 1998-274 (collateral estoppel), affd. without published
opinion 201 F.3d 447 (10th Cir. 1999); see also Gustafson v.
Commissioner, 97 T.C. 85, 89-92 (1991) (if an affirmative defense
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