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qualify for the exclusion? Our slight adjustment in the
applicable period for 2001 does not constitute a new issue.
Respondent argues that adjusting the applicable period at
this point in the litigation would be unfair where respondent
prepared for trial based on an applicable period of January 1 to
December 31, 2001.
However, in respondent’s pretrial memorandum and posttrial
briefs, respondent acknowledges: (1) That we might consider
other applicable periods, (2) that an applicable period may be
adjusted before examination, during examination, and during
litigation, and (3) that we may make a finding as to the
appropriate and most favorable applicable period. In
respondent’s pretrial memorandum, respondent states as follows:
“During 2001 and 2002, petitioners were not physically present in
a foreign country for at least 330 full days, nor any other
period of 12 months in a row starting or ending in 2001 and
2002.” (Emphasis added.) Furthermore, respondent has had ample
opportunity to brief the Court and to review the evidence.
On the facts of this case, we do not believe that the
applicable period we use for petitioners for 2001 constitutes
unfair surprise to respondent. See Estate of Keeton v.
Commissioner, T.C. Memo. 2006-263.
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