- 23 -
569 (1958), in which we have refused to allow a party to raise an
issue for the first time in posttrial briefing.5
To decide whether the Commissioner can do this so late in
the game, we first outline our rules on putting issues in play.
We then analyze section 304 as it might apply here to decide
whether the Commissioner can rely on it.
1. Raising Arguments and Issues After Trial
We begin by noting that we share the Hursts’ dim view of
raising an issue for the first time in a posttrial answering
brief. Numerous procedural safeguards built into the Code and
our own rules are designed to prevent such late-in-the-day maneu-
vering. Section 7522(a) requires the Commissioner to “describe
the basis for” any increase in tax due in the notice of deficien-
cy. After a case in this Court has begun, Rule 142(a) places the
burden of proof on the Commissioner “in respect of any new
5 The Commissioner does argue that the Hursts must have
known that section 304 applied because they both filed waivers of
family attribution for their sale of RHI stock. A close look at
the waiver request shows, however, that it is based on the clear-
ly faulty representation that RHI itself issued the $250,000 note
in redemption of the RHI stock. This appears, then, to be just a
markup of the waiver request filed at the same time by Mr. Hurst
for the actual redemption of his HMI stock. Whether it was filed
out of an abundance of caution by the Hursts’ former adviser or
out of a misunderstanding of the deal, it nowhere mentions the
fact that RHI and HMI might be affected by section 304. And, of
course, the failure of the Commissioner even to raise this point
at trial means that the Hursts didn’t provide any explanation of
their own.
Page: Previous 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 NextLast modified: May 25, 2011