Joel Rappaport - Page 11

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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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