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answer. Petitioner claimed deductions in his Form 1040 for 2001,
which he submitted after respondent filed the amendment to
answer. Thus, petitioner, not respondent, changed positions
belatedly. Petitioner’s assertion that respondent bears the
burden of disproving his belatedly claimed deductions is
untenable; those deductions are not new matter under Rule 142(a).
See Comtek Expositions, Inc. v. Commissioner, 99 Fed. Appx. 343,
345-346 (2d Cir. 2004), affg. T.C. Memo. 2003-135; Widemon v.
Commissioner, T.C. Memo. 2004-162.
Petitioner points out that the Commissioner asserted new
matter in Hurst v. Commissioner, 124 T.C. 16 (2005), and Shea v.
Commissioner, 112 T.C. 183 (1999). Those cases are
distinguishable because the taxpayers in those cases did not file
returns after the notices of deficiency were issued.
Petitioner contends that respondent knew or should have
known about the expenses of JRC and RSC which flowed through to
petitioner because respondent had the Forms 1120S and Schedules
K-1, Shareholder’s Share of Income, Credits, Deductions, Etc.,
for JRC and RSC more than 14 months before respondent issued the
notice of deficiency. We disagree; respondent could not have
disallowed petitioner’s deduction of the flow-through items when
respondent issued the notice of deficiency because petitioner had
not yet deducted them.
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