-39-
find that petitioners have not shown that there was reasonable
cause for the understatement of tax required to be shown on their
1999 return or that they acted in good faith with respect
thereto.
Computational Errors
In their posttrial brief, petitioners allege three
“computational errors” for the first time in these proceedings.
The first computational error involves the amount of the net
operating loss for taxable 2000 that can be carried back to 1999.
According to petitioners, respondent miscalculated the net
operating loss by basing the calculation on adjusted gross income
of -$5,522, rather than on -$15,522, the correct amount.
Petitioners failed to raise this issue in their petition,
and it is not before the Court. We do not consider an issue that
has not been pleaded. See, e.g., Frentz v. Commissioner, 44 T.C.
485, 491 (1965), affd. 375 F.2d (6th Cir. 1967); Sicanoff
Vegetable Oil Corp. v. Commissioner, 27 T.C. 1056, 1066 (1957)
(and the cases cited thereon), revd. on other grounds 251 F.2d
764 (7th Cir. 1958). This is particularly true in a case like
this where the issue cannot be considered without surprise and
prejudice to the other party. See Estate of Mandels v.
Commissioner, 64 T.C. 61, 73 (1975). Furthermore, we note that
the difference of $10,000, about which petitioners complain, is
due to the inclusion in gross income of the distributions of
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