Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca8-03-03917/USCOURTS-ca8-03-03917-0/pdf.json

Parties Involved:
Diane S. Blodgett
Appellant
Commissioner of Internal Revenue
Appellee

Document Text:

United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________

No. 03-3917

___________

Diane S. Blodgett, *

*

Appellant, *

* Appeal from the United States

v. * Tax Court.

*

Commissioner of Internal Revenue, *

*

Appellee. *

___________

Submitted: October 22, 2004

Filed: January 12, 2005 

___________

Before BYE, LAY, and GRUENDER, Circuit Judges.

___________

BYE, Circuit Judge.

Diane Blodgett, a special education teacher, appeals from a tax court

determination in favor of the Internal Revenue Service. We affirm.

I

We adopt the facts as set forth in the tax court's opinion, T.C.M. 2003-212

(2003), and simply restate some critical facts so as to make understandable the legal

issues presented herein. In the 1970’s, Ms. Blodgett’s ex-husband Michael Blodgett

founded T.G. Morgan, Inc., a business engaged in the buying and selling of rare

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coins. The enterprise began as a sole proprietorship, later incorporated, utilizing a

subchapter S election designation for income tax purposes, in 1985. As of 1992, Mr.

and Ms. Blodgett each owned 27.5 percent of the business. Their three children

owned 15 percent each.

Mr. Blodgett operated the business similar to a ponzi scheme. By all accounts,

it was successful and enabled the Blodgetts to lead a lavish lifestyle. As examples,

the Blodgetts, personally or through their business entity, held rare coins and

historical documents with a collective value of more than $20 million, a

condominium and docking space in Key Largo, Florida, purchased for $583,379, a

Mercedes 560 SL, a 23-foot Cutty Cabin Sunrunner boat and a Simbari oil painting

worth approximately $85,000.

Eventually, the long arm of the law caught up with Mr. Blodgett as he was

charged with and convicted of several counts of fraud. His wife was not charged with

any criminal wrongdoing. In addition to the criminal troubles, the Federal Trade

Commission (FTC) initiated a civil action against T.G. Morgan and Mr. Blodgett,

alleging deceptive trade practices and seeking permanent injunctive relief and

consumer redress. T.G. Morgan, Mr. Blodgett and the FTC reached a settlement

which was memorialized in a consent order signed March 4, 1992. Diane Blodgett

signed the consent order as a nonparty spouse.

The consent order provided for the creation of a “settlement estate” and a

“litigation estate,” to include assets transferred from T.G. Morgan and the Blodgetts.

A receiver was appointed to liquidate the assets in both estates and disburse the

money. The litigation estate was used to pay litigation expenses for the defense of

actual or reasonably anticipated governmental enforcement actions against the

Blodgetts. The settlement estate was used to pay claims of defrauded customers of

the business. The litigation estate was established with $300,000, funded solely by

virtue of the liquidation of a so-called Coin Fund. The remaining proceeds from the

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liquidation of the Coin Fund were transferred to the settlement estate. The settlement

estate also included the Florida property and the Simbari painting, among other

assets.

After the onset of the FTC case but prior to the consent order, creditors of the

business filed an involuntary bankruptcy petition against the business. On August 21,

1992, the district court ordered the receiver in the FTC case to turn over all assets

held in the settlement estate to the bankruptcy trustee (turnover order). The turnover

order specified those assets determined in the bankruptcy proceeding not to be the

property of the T.G. Morgan bankruptcy estate to be returned to their rightful owners.

After the turnover order, the Florida condominium and Simbari painting each became

parts of the bankruptcy estate and were not returned to the settlement estate.

As part of the liquidation proceedings, the bankruptcy trustee prepared and

filed T.G. Morgan’s tax returns for the years 1990 through 1998. Diane Blodgett did

not participate in the preparation of these returns. On the 1992 return, filed by the

trustee in February 1999, T.G. Morgan reported an ordinary loss in the amount of

$17,202. The trustee prepared and issued to the shareholders a notice indicating each

respective share of the loss amount and the fact such loss was deductible only to the

extent of shareholder basis in the corporation, which the trustee determined was zero.

The document at issue on appeal is Ms. Blodgett’s 1998 personal federal

income tax return prepared by her ex-husband from prison. It reported wage income

of $45,788.24 and income tax withheld of $5,582.56. The return also included a

$38,046,524 carryover business loss deduction. Such figure reportedly represented

the amount described on the proof of claim filed by the FTC in the bankruptcy case

against T.G. Morgan. The return claimed a refund of all of her withholdings for

1998. Ms. Blodgett attached a letter to her tax return explaining the large loss

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1

Ms. Blodgett claimed deductions on her 1994, 1995, 1996, and 1997 returns

that were similar in amount and nature to the loss deduction claimed on the 1998

return. She claimed and received refunds of her annual withholdings of $736.36 in

1996 and $2,722.78 in 1997. The 1996 and 1997 returns also attached explanatory

letters. In the letter attached to the 1996 return, petitioner alleged that the FTC stole

the pension plan funds worth $815,000 and claimed that the assets turned over to

settle the FTC case “were still ‘our’ property when the FTC made hundreds of illegal

sales in commercially unreasonable manner--while serving as fiduciary.”

2

At trial, petitioner stated that she was no longer claiming the entire amount of

that deduction; yet, she reiterated that she was entitled to deduct losses carried

forward from T.G. Morgan. 

-4-

carryovers stemmed from the loss of property arising out of the consent agreement

she signed as a nonparty spouse.1

 

On February 15, 2000, the I.R.S. sent Ms. Blodgett a notice of deficiency

disallowing the claimed deduction. She then petitioned the tax court for a

redetermination. At trial, the tax court characterized the primary issue for decision

as whether she was entitled to all or part of the $38,046,524 loss deduction claimed

on her 1998 return as the carryover of a 1992 business loss.2

 Ms. Blodgett also

claimed the following specific items as deductible losses: (1) $733,500 for the theft

loss of a pension fund; (2) $225,000 as carryforward legal expenses; (3) a $142,482

investment loss on a condominium and lot in Florida; (4) a $42,500 investment loss

on a Simbari painting; (5) a $561,375 carryforward business or investment loss on

rare coins; and (6) a $125,403 carryforward business or investment loss on historical

documents. 

The tax court entered a decision in favor of the I.R.S., finding Ms. Blodgett

failed to meet her burden of proof on the issues of ownership, loss, value and

deductibility of the items contributed to the settlement. She subsequently filed the

current appeal. On appeal, she contends the tax court erred in not shifting the burden

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of proof to the Commissioner of Internal Revenue, pursuant to 26 U.S.C. § 7491, as

to whether there was a loss; in failing to likewise shift the burden of proof when the

Commissioner introduced new evidence on the eve of trial; and in treating the

trustee’s tax return as presumptively correct without further authentication. 

II

We apply different standards of review to different components of a tax court’s

decision. We review a tax court’s factual determinations under a clearly erroneous

standard. Clajon Gas Co. v. C.I.R., 354 F.3d 786, 789 (8th Cir. 2004). Under this

standard, “[w]e will uphold the Tax Court’s finding unless we are ‘left with a definite

and firm conviction’ that the Tax Court has committed a mistake.” Estate of Ford v.

C.I.R., 53 F.3d 924, 926-27 (8th Cir. 1995) (quoting Estate of Palmer v. C.I.R., 839

F.2d 420, 423 (8th Cir. 1988)). When the tax court’s fact finding is based on a

credibility determination, such finding is nearly unreviewable. See Anderson v. City

of Bessemer City, 470 U.S. 564, 575 (1985) (stating a fact finder’s determination on

credibility can virtually never be considered clearly erroneous). In contrast, a tax

court’s legal conclusions and mixed questions of law and fact are subject to de novo

review. Clajon Gas, 354 F.3d at 789.

A. Shifting Burden of Proof on Tax Loss

The question of whether a taxpayer produced evidence sufficient to shift the

burden of proof to the I.R.S. under 26 U.S.C. § 7491 is a legal one which we review

de novo. Estate of Mitchell v. C.I.R., 250 F.3d 696, 701 (9th Cir. 2001). We evaluate

the sufficiency of the evidence under the applicable standard of review against a

backdrop of each party’s burden of proof. Limited, Inc. v. C.I.R., 286 F.3d 324, 331

(6th Cir. 2000). Generally, the I.R.S. determination on the existence of a tax

deficiency is presumed correct; thus, the taxpayer generally bears the burden of

proving entitlement to a claimed deduction by a preponderance of the evidence.

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3

Section 7491(a) states, in relevant part:

(1) General rule--If, in any court proceeding, a taxpayer introduces

credible evidence with respect to any factual issue relevant to

ascertaining the liability of the taxpayer for any tax imposed by subtitle

A or B, the Secretary shall have the burden of proof with respect to such

issue.

(2) Limitations--Paragraph (1) shall apply with respect to an issue only

if--

(A) the taxpayer has complied with the requirements under this title to

substantiate any item;

(B) the taxpayer has maintained all records required under this title and

has cooperated with reasonable requests by the Secretary for witnesses,

information, documents, meetings, and interviews; and

(C) in the case of a partnership, corporation, or trust, the taxpayer is

described in section 7430(c)(4)(A)(ii).

(3) Coordination--Paragraph (1) shall not apply to any issue if any

other provision of this title provides for a specific burden of proof with

respect to such issue.

-6-

Griffin v. C.I.R., 315 F.3d 1017, 1021 (8th Cir. 2003). This burden, however, may

shift to the I.R.S. to disprove entitlement to a claimed deduction if the taxpayer

introduces “credible evidence” complete with the necessary substantiation and

documentation sufficient to fulfill the requirements of § 7491.3

 Interex, Inc. v. C.I.R.,

321 F.3d 55, 58 (1st Cir. 2003). 

We begin with a discussion of credible evidence. In Griffin, we defined

“credible evidence” for purposes of § 7491 as “the quality of evidence, which after

critical analysis, the court would find sufficient upon which to base a decision on the

issue if no contrary evidence were submitted (without regard to the judicial

presumption of IRS correctness).” 315 F.3d at 1021. Ms. Blodgett contends the tax

court ignored § 7491 by failing to shift the burden of disproving her loss to the

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Commissioner after she introduced uncontroverted testimony, which she alleges was

thoroughly corroborated by documentary evidence, that, as part of the settlement

agreement, she irrevocably lost millions of dollars in assets when she turned over the

assets to the FTC receiver. Ms. Blodgett’s argument, however, fails to the extent

she relies on Griffin for the proposition any testimony offered by the taxpayer

tending to support a claimed deduction is sufficient to shift the burden of proof to

the I.R.S. While a tax court must consider the testimony as “if no contrary evidence

were submitted (without regard to the judicial presumption of IRS correctness),” a

tax court has the right in the first instance to reject the testimony as incredible. See

Marcella v. C.I.R., 222 F.2d 878, 883 (8th Cir. 1955) (stating a tax court “is not

compelled to believe evidence which to it seems improbable, or to accept as true

uncorroborated evidence of interested witnesses even though uncontradicted”); cf.

Willis v. State Farm Fire and Cas. Co., 219 F.3d 715, 720 (8th Cir. 2000) (stating “a

jury is free to disbelieve any witness, even if the testimony is uncontradicted or

unimpeached”). A fact finder may choose to disbelieve evidence on its face even

without evidence to the contrary. See Steel v. Downs, 438 F.2d 310, 312 (8th Cir.

1971) (stating “[t]he trier of the facts is not required to accept the uncontradicted

testimony of an uncorroborated interested party, although such testimony is not

contradicted by other testimony.”); cf. Anderson, 470 U.S. at 575 (highlighting a trial

judge’s ability to “. . .be aware of the variations in demeanor and tone of voice that

bear so heavily on the listener’s understanding of and belief in what is being said.”).

This concept is not only fundamental since incredible testimony, axiomatically,

cannot constitute credible evidence, but this concept is contained within the

definition of credible evidence. Ms. Blodgett conveniently disregards the portion

of the credible evidence definition requiring a tax court to conduct a “critical

analysis” of the evidence. If a critical analysis requires nothing else, it requires a tax

court to conduct a credibility determination before labeling evidence “credible.”

With this qualification on her interpretation of Griffin, we will now analyze each

claimed deduction.

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1. Business Carryover Expenses

Ms. Blodgett claimed a deduction for a $38,046,524 net operating loss

suffered by T.G. Morgan in 1992 stemming from the turnover of assets to the FTC.

Sub-S corporation losses are generally deductible by its shareholders to the extent

of the shareholder’s basis. 26 U.S.C. § 1366(a) & (d)(1). As proof of the loss, she

introduced evidence the FTC filed a $38 million proof of claim as creditor of T.G.

Morgan in the bankruptcy proceeding. She also introduced the testimony of her

husband who testified part of the $38 million turned over to the FTC were personal

assets. The question before us is whether this evidence was “credible evidence”

sufficient to shift the burden of proof to the I.R.S. Even though the deduction was

a mere $45,788.24 out of the claimed $38 million loss, we find the evidence was not

sufficient to support the deduction.

The testimony establishes the FTC made a claim, but it does not establish the

claim was actually paid. Assuming the claim was paid, the loss would only be

deductible to the extent of Ms. Blodgett’s basis in the corporation. Oren v. C.I.R.,

357 F.3d 854, 857 (8th Cir. 2004). Relying upon T.G. Morgan’s 1992 tax return, the

tax court concluded her basis in the corporation was zero. While she disputes the

accuracy of the return and argues the personal assets turned over to the FTC as part

of the $38 million settlement increased her basis in the corporation, we find the tax

court did not clearly err in reaching its basis conclusion in light of the bankruptcy

trustee’s notice and the lack of certainty as to the ownership of the assets contributed

to the settlement. However, even if we assume the claim was paid and further

assume she had sufficient basis in the corporation, the deduction is only allowed if

she did not already deduct the loss in a prior year. She did not introduce evidence

in this regard. At a minimum, a taxpayer must produce credible evidence as to each

material factual assertion necessary to support a claimed deduction before the burden

shifts to the I.R.S. See Griffin, 315 F.3d at 1021 (defining credible evidence as the

quality of evidence sufficient to support a favorable decision on an issue).

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According to the tax court, T.G. Morgan had a defined benefit pension plan,

the T.G. Morgan Defined Benefit Pension Plan (pension plan). However, the record

is not complete with respect to the formation, administration, and records of the

pension plan. Insofar as the record reveals, its activity was not reported to the

Internal Revenue Service on Form 5500-EZ, Annual Return of One-Participant

(Owners and Their Spouses) Retirement Plan. Ms. Blodgett introduced at trial an

unfiled Form 5500-EZ relating to the pension plan.

-9-

Furthermore, she failed to maintain and produce the proper records to substantiate

her claim, thus she did not meet the burden shifting requirements. See 26 U.S.C.

§§ 7491(2)(A) & (B).

2. Theft Loss of Pension Fund

Ms. Blodgett claimed a deduction of $733,500 for the theft loss of a pension

fund, which she alleged was stolen by the FTC and other governmental agencies and

officials.4

 The only evidence this loss occurred as a result of theft was her testimony.

She argues her testimony is sufficient to shift the burden of proof. Griffin, 315 F.3d

at 1020-21 (reversing a tax court finding that the taxpayer’s uncorroborated and selfserving testimony was not enough to shift the burden to the I.R.S.). If all she needed

to show to support the deduction was evidence of theft, then she may be correct.

However, in addition to evidence of an actual theft, theft losses are deductible only

in the year discovered. 26 U.S.C. § 165(e). Therefore, she must have produced

evidence of her discovering the loss in 1998, which she failed to do. The tax court

found insufficient evidence to prove even the mere existence of a pension fund. The

court also found incredible her contention government officials involved in the

bankruptcy proceeding and civil action stole the money from the pension fund. Even

if a pension fund did exist and it was stolen by government officials, she is not

entitled to a deduction because the tax court found she would have discovered these

happenings well before 1998.

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3. Carryforward Legal Expenses

Ms. Blodgett claimed a deduction of $225,000 for carryforward legal

expenses. Legal expenses incurred as an ordinary and necessary business expense

are deductible, but legal expenses incurred as a personal expense are nondeductible.

26 U.S.C. § 162(a). It is unclear from the record what evidence, if any, she produced

in support of the deduction for carryforward legal expenses, but the tax court found

“she failed to prove that her costs, if any, for defending herself and Mr. Blodgett

from civil and criminal liability connected with the business were other than

nondeductible personal expenses.” Furthermore, to the extent she could have shown

a business purpose, her loss could only be deducted in proportion to her basis in the

corporation. Oren, 357 F.3d at 857. As mentioned, she failed to produce convincing

evidence showing her basis in the corporation. 

4. Loss of Condominium

Ms. Blodgett testified to the purchase of a condominium in Florida for the

purpose of renting it out and sustained a $142,482 investment loss when the property

was transferred to the settlement estate and later the bankruptcy trustee. The Tax

Code allows a deduction for a loss incurred in connection with a transaction

conducted for profit, but does not allow a deduction for a personal, living or family

expense. 26 U.S.C. § 165 (c)(2). Ms. Blodgett testified she and her husband bought

the property as an investment. She argues her testimony is sufficient to shift the

burden of proof. The tax court, however, found her testimony lacked credibility at

trial. Incredible testimony is not sufficient to shift the burden of proof. Griffin, 315

F.3d at 1021. In any event, the tax court ultimately found the objective evidence,

namely, the evidence of the Blodgetts’ lack of expertise in the real estate business,

lack of market analysis prior to purchase, and the failure to actually rent out the

property, outweighed any incredible statements supporting the deduction. The tax

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court concluded the Blodgetts purchased the property for personal, living and family

purposes.

5. Loss on Simbari Painting

Ms. Blodgett testified she purchased an $85,000 Simbari oil painting as an

investment and claimed to suffer a $42,500 loss (one-half of its cost) when the

painting was transferred to the settlement estate. The Tax Code allows a deduction

for a loss incurred in connection with a transaction conducted for profit, but does not

allow a deduction for a personal, living or family expense. 26 U.S.C. § 165 (c)(2).

Her testimony indicated she bought the painting as an investment. She argues her

testimony is sufficient to shift the burden of proof. The tax court’s decision is

unclear as to the credibility of her testimony in support of this specific deduction.

The tax court, when necessary, clearly dismissed the credibility of her singular

testimony in support of the other claimed deductions, but the manner in which this

portion of the tax court’s decision reads it only dismissed the credibility after

considering the objective evidence to the contrary. In the light of the overall tone

of the decision, this discrepancy may be inadvertent, but if Ms. Blodgett’s testimony

is credible, the burden of disproving entitlement to this deduction should have

shifted to the I.R.S. Griffin, 315 F.3d at 1021 (defining credible evidence).

However, regardless of which party bore the burden of proof, the overwhelming

weight of evidence supported a finding for the I.R.S. The tax court found both Mr.

and Ms. Blodgetts’ lack of expertise in art, their lack of history in art investments

and their failure to obtain a market analysis of the painting did not support her claim

the painting was purchased as an investment. The tax court found, based on Mr.

Blodgett’s testimony, that personal pleasure was the primary reason for owning the

painting. Therefore, even if the tax court erred in not shifting the burden of proof,

any such error was harmless, as will be explained in subsection 7 below.

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6. Loss on Rare Coins and Historical Documents

Ms. Blodgett testified she suffered deductible carryforward business or

investment losses on $561,375 in rare coins and $125,403 in historical documents.

The tax court, however, found her self-serving testimony incredible. She produced

no other specific evidence regarding the ownership, value and transfer of the rare

coins and historical documents claimed as carryforward business or investment

losses. Accordingly, the tax court found she did not meet her burden of proof with

respect to the ownership, value, and transfer of the rare coins and historical

documents. Considerable evidence existed showing the Blodgetts did not own the

coins and documents, rather T.G. Morgan and its customers did. Moreover, if she

claimed the losses as theft losses, such are only deductible in the year discovered,

and she did not show when she discovered them. 26 U.S.C. § 165(e). 

7. Significance of the Burden Shift

According to Ms. Blodgett, any failure to shift the burden of proof would

require us to reverse the decision of the tax court and remand the case with

instructions to retry it with the burden assigned to the I.R.S. Once again, she relies

on Griffin. See 315 F.3d at 1022 (reversing and remanding for failure to shift the

burden of proof). In Griffin, like the instant case, the tax court declined to shift the

burden of proof to the I.R.S. under § 7491 because the taxpayer’s “uncorroborated

and self-serving testimony was not enough to overcome the clear evidence of nondeductibility.” Id. at 1021. On appeal, the taxpayer claimed he produced sufficient

“credible evidence” within the meaning of § 7491 to shift the burden of proving the

issue of non-deductibility to the I.R.S. Id. at 1020-21. The court agreed. Upon

reviewing the taxpayer’s testimony in absence of any evidence or presumptions to

the contrary, the court determined the taxpayer produced enough credible evidence

to support the claimed deductions. Id. The court remanded the case to the tax court

for further proceedings despite the tax court’s statement in its opinion the burden of

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proof was irrelevant because the weight of the evidence supported a finding for the

I.R.S. Id. at 1022. Rebuking the tax court, the court declared “it is not sufficient to

summarily conclude that the outcome is the same regardless of who bears the burden

of proof; if that were the case, § 7491 would have no meaning.” Id.

In contrast to Griffin, another panel of this Court has found a tax court does

not commit error in not addressing the burden of proof because “‘[t]he shifting of the

evidentiary burden of preponderance is of practical consequence only in the rare

event of an evidentiary tie.’” Polack v. C.I.R., 366 F.3d 608, 613 (8th Cir. 2004)

(quoting Cigaran v. Heston, 159 F.3d 355, 357 (8th Cir. 1998)). While the Polack

panel addressed the burden shift in the context of a new matter rather than under

§ 7491, id., the significance of a burden shift is of general application. The

circumstances of Griffin and Polack are remarkably similar in that the tax court in

both cases did not decide the burden of proof question because the weight of the

evidence supported a finding for the I.R.S. Compare Griffin, 315 F.3d at 1020, with

Polack, 366 F.3d at 613. We are thus faced with an apparent conflict in precedents

on the significance of the shifting burden of proof.

“When faced with conflicting precedents we are free to choose which line of

cases to follow.” Graham v. Contract Transp., Inc., 220 F.3d 910, 914 (8th Cir.

2000). We choose to follow the guidance of Polack. There is a simple reason for

our choice. In a situation in which both parties have satisfied their burden of

production by offering some evidence, then the party supported by the weight of the

evidence will prevail regardless of which party bore the burden of persuasion, proof

or preponderance. See Philip N. Jones, The Eighth Circuit Weighs In on the Burden

of Proof–Will It Change the Outcome After All?, 98 J. Tax’n 226, 230 (2003).

Therefore, a shift in the burden of preponderance has real significance only in the

rare event of an evidentiary tie. Id. Here, the record is clear, if the tax court did err

in failing to shift the burden of proof, any error was harmless because the weight of

the evidence supported a decision for the Commissioner. 

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B. Shifting Burden of Proof on New Evidence

Ms. Blodgett claims the tax court erred by not shifting the burden of proof to

the I.R.S. on an alleged new issue on the eve of trial. Tax Court Rule 142 states,

“[t]he burden of proof shall be upon the [taxpayer], . . . except that, in respect of any

new matter, . . . it shall be upon the [Commissioner].” A new position taken by the

Commissioner is not necessarily a “new matter” if it merely clarifies or develops the

Commissioner’s original determination without requiring the presentation of

different evidence, being inconsistent with the Commissioner’s original

determination, or increasing the amount of the deficiency. Estate of Kanter v. C.I.R.,

337 F.3d 833, 851 (7th Cir. 2003). 

We review de novo the question of whether the alleged new issue is

considered a “new matter” for Rule 142 burden shifting purposes. Id. The asserted

“new matter” involves the 1992 tax return of the T.G. Morgan bankruptcy estate,

discovered and disclosed five days before trial, which allegedly uncovered evidence

there was insufficient basis to support the claimed deductions. However, the

discovery of the tax return and the I.R.S.’s subsequent reliance on the tax return does

not constitute a “new matter.” In its first trial memorandum fourteen months before

trial, the I.R.S. alleged Ms. Blodgett did not have sufficient basis in the corporation

to support the deduction. The discovery of the tax return only supplements the

Commissioner’s original allegation. Furthermore, the discovery of the tax return did

not increase the amount of the deficiency, but was merely evidence tending to

disprove her entitlement to the deduction. Thus, the matter was not new and the tax

court did not err by failing to shift the burden of proof.

C. Admission of Trustee’s Tax Return

Finally, Ms. Blodgett argues the contents of the tax return prepared by the

trustee represent inadmissible hearsay; thus, the tax court’s treatment of the return

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as presumptively correct was reversible error. A tax return is generally considered

inadmissible hearsay with the exception that the return may constitute an admission

by the taxpayer or someone on the taxpayer’s behalf. Greenbaum v. United States,

80 F.2d 113, 125 (9th Cir. 1935). We express no opinion on the possible hearsay

nature of the return, but note she failed to raise this hearsay objection at trial. An

argument not raised at trial cannot be raised for the first time on appeal “unless the

obvious result would be a plain miscarriage of justice.” United States v. Gutierrez,

130 F.3d 330, 332 (8th Cir. 1997) (plain error review) (quoting Davis v. Wyrick, 766

F.2d 1197, 1204 (8th Cir. 1985)). Ms. Blodgett, however, not only failed to raise a

hearsay objection at trial, she stipulated to the authenticity and admissibility of the

return. Although she did not stipulate to the return’s accuracy, relevancy or

materiality, by stipulating to the return’s admissibility without further reservation she

waived any hearsay objection and thus forfeited any right to appellate plain error

review. See United States v. Olano, 507 U.S. 725, 732-33 (1991) (finding an

intentional relinquishment of a right extinguishes plain error review); United States

v. Tulk, 171 F.3d 596, 600 (8th Cir. 1999) (finding plain error review of the trial

court’s admission of a prior misdemeanor conviction was precluded because of the

defendant’s deliberate waiver).

III

We affirm the judgment of the tax court.

______________________________

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