Opinion
12362-21
05-28-2024
BEAVERDAM CREEK HOLDINGS, LLC, BEAVERRDAM CREEK INVESTORS, LLC, TAX MATTERS PARTNER, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
Joseph Robert Goeke, Judge
On May 7, 2024, respondent filed a Motion for Reconsideration of our March 26, 2024, Order granting petitioner's Motion in Limine to Exclude Evidence Relating to Partner Status. The excluded evidence relates to respondent's argument that Service Granite Co. was not a bona fide partnership in a prior year that is not before the Court. Petitioner objects to the granting of respondent's Motion.
In our Order we held that respondent first raised the bona fide partnership issue in his pretrial memorandum, that he raised it too late, and that allowing him to raise it would cause undue prejudice and surprise to petitioner. During a hearing on petitioner's Motion, we found that respondent's response to an interrogatory provided on July 27, 2023, did not clearly articulate that respondent was raising the bona fide partnership issue. Accordingly, we granted petitioner's Motion.
Standard for Reconsideration
There are no specific rules governing the standards with respect to motions for reconsideration of orders. Under Rule 161, reconsideration of a finding of fact or opinion is intended to correct substantial error either of fact or law. Estate of Quick v. Commissioner, 110 T.C. 440, 441 (1998). Deciding whether to grant a motion for reconsideration lies within the Court's discretion. CWT Farms, Inc. v. Commissioner, 79 T.C. 1054, 1057 (1982). It is also within the Court's discretion to consider an issue not raised in the pleadings taking into account the risk of prejudice or unfair surprise to the opposing party. Smalley v. Commissioner, 116 T.C. 450, 456 (2001). Prejudice or unfair surprise arises when the opposing party may be prevented from presenting evidence that it might have offered if the issue had been raised timely. Id. at 456-57.
Unless otherwise indicated, statutory references are to the Internal Revenue Code, Title 26 U.S.C., in effect at all relevant times, and Rule references are to the Tax Court Rules of Practice and Procedure.
Respondent's Argument
Respondent alleges that we erred because our order conflicts with rulings in other cases. He further argues that he raised the bona fide partnership issue in the FPAA with the following "all-encompassing" language:
To the extent you are able to establish that a noncash charitable contribution has been made, you failed to establish that the gift or contribution satisfied all the requirements of I.R.C. § 170 and the corresponding Treasury Regulations for deducting a noncash charitable contribution.
We disagree with respondent. The cases that he cites as having inconsistent rulings are clearly distinguishable. Oconee Landing Prop., LLC, v. Commissioner, Dkt No. 11814-19, and Jackson Crossroads, LLC v. Commissioner, Dkt No. 12235-20, involved whether the easement property was inventory, which involved whether the deduction satisfied the requirements of section 170(e). Only Rock Cliff Rsrv., LLC v. Commissioner, Dkt No. 12472-20, involved a bona fide partnership issue, but the taxpayer in that case was made aware of the issue 3 months before trial and, thus, was not unduly prejudiced or surprised. Here, respondent raised the bona fide partnership issue for the first time 2 weeks before trial. Moreover, the statement in the FPAA that "all requirements" of section 170 does not clearly implicate the bona fideness of a partner to the partnership in a prior year.
We reaffirm our finding that there would be unfair surprise and prejudice to petitioner if we were to consider the bona fide partnership issue. Accordingly, it is
ORDERED that respondent's Motion for Reconsideration, filed May 7, 2024, is denied.