- 31 -
passed which alters the practical control of the taxpayer under
State corporate law. Id. ; see also Wright v. United States, 482
F.2d 600, 608-609 (8th Cir. 1973); Patterson Trust v. United
States, 729 F.2d 1089, 1095 (6th Cir. 1984).
Due to the Commissioner’s tardiness in raising the section
304 issue, the parties offered no evidence as to whether the
passage from 100 percent to 51 percent passes any thresholds in
Michigan corporate law that might affect RHI. The record is
similarly bereft of indicators about the rights over RHI held by
Todd Hurst, Tuori, and Dixon. At trial, Tuori and others did
testify that corporate decisions at HMI were made by a majority
vote of himself, Todd Hurst, and Dixon, and that 2-to-1 votes
were regular occurrences. This issue was not fleshed out in the
manner we assume counsel for each party would have, had they
focused upon clarifying the section 304 issue, and we are thus at
a loss to analyze how it would affect a proper section 302(b)(1)
analysis.
At the end of this long digression through sections 304 and
parts of section 302 not raised before or during trial, we need
not reach any firm conclusion on the issue. It is enough to
observe that raising section 304 in an answering brief is in this
case not just making a new argument, but raising a new matter.
The Hursts’ case thus ends up looking like Shea v. Commis-
sioner, 112 T.C. 183 (1999). Here, as in Shea, there is an ob-
Page: Previous 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 NextLast modified: May 25, 2011