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that, as of November 20, 1989, the Roses had additional basis of
$149,109 in their Zephyr interest as a result of the discharge of
Zephyr’s indebtedness through its bankruptcy proceeding. In
making this concession, respondent asserted: “The evidence
relied upon by the respondent in support of this concession is
not part of the record of these cases; this concession is based
upon documentation that was supplied to the respondent several
months after the trial record for these cases was closed”.
Petitioners raised two additional contentions for the first
time in their supplemental brief filed August 19, 2004. The
first contention dealt with respondent’s determination to include
a $480,000 note that Rose gave to Mills in the calculation of
Roses’ basis in their Zephyr interest. The second contention
dealt with treating the entire amount of the transfers from
PK Ventures, TBPC, and TPTC to Zephyr as constructive dividends
to Rose. Because these contentions were raised by petitioners
for the first time in their supplemental brief, we did not
consider them in reaching our decisions in these cases. See
Rules 31(a), 41(a); Krause v. Commissioner, 99 T.C. 132, 177
(1992), affd. sub nom. Hildebrand v. Commissioner, 28 F.3d 1024
(10th Cir. 1994); DiLeo v. Commissioner, 96 T.C. 858, 891 (1991),
affd. 959 F.2d 16 (2d Cir. 1992); Foil v. Commissioner, 92 T.C.
376, 418 (1989), affd. 920 F.2d 1196 (5th Cir. 1990);
Markwardt v. Commissioner, 64 T.C. 989, 997 (1975).
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