* This order and judgment is not binding precedent, e xcept under the

doctrines of law of the case, res judicata, and col lateral estoppel. The court generally disfavors the citation of orders and judg ments; nevertheless, an order and judgment may be cited under the terms and condi tions of 10th Cir. R. 36.3. 

## F I L E D United States Court of Appeals Tenth Circuit 

### NOV 6 2000 

### PATRICK FISHER Clerk UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT

TIMOTHY JOHN MARTIN,

Petitioner-Appellant,

v. COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellee. No. 99-9027 (T.C. No. 20034-88) (Petition for Review)

ORDER AND JUDGMENT *

Before BRORBY, PORFILIO, and MURPHY , Circuit Judges.

After examining the briefs and appellate record, th is panel has determined unanimously to grant the parties’ request for a dec ision on the briefs without oral argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore ordered submitted without oral argument.-2-

Taxpayer Timothy John Martin requests review of a d ecision of the United States Tax Court disallowing certain losses, deduct ions, and credits claimed from his investment in a limited partnership tax shelter . On appeal, taxpayer asserts that the Tax Court violated his due process rights by ruling against him without affording him an evidentiary hearing. We have juri sdiction pursuant to 26 U.S.C. § 7482, and we affirm the decision of the Tax Court

. I. Background In the early 1980’s, taxpayer formed R & M Partners , an entity he then used to purchase a limited partnership interest in Duran go Oil and Gas Associates (Durango), an Electra/Hemisphere tax shelter. On h is tax returns for the years 1980, 1981, and 1982, taxpayer claimed distributive losses, deductions, and tax credits from the Durango interest. In 1988, the Co mmissioner sent taxpayer a notice of deficiency disallowing the Durango losses , deductions, and tax credits and assessing increased interest pursuant to 26 U.S .C. § 6621(c). Taxpayer timely filed a petition in Tax Court for aredetermination of the stated tax liabilities. The Tax Court issued taxpayer an order to show cause as to why it should not enter a decision in his case in accordance with Krause v. Commissioner , 99 T.C. 132 (1992), aff’d sub nom. Hildebrand v. Commissioner , 28 F.3d 1024 (10th Cir. 1994), the test case in the Elektra/Hemisphere group of Tax Court cases. After considering taxpayer’s resp onse, the Tax Court entered an-3-

order upholding the Commissioner’s finding of incom e tax deficiencies for the years in question and assessing increased interest pursuant to 26 U.S.C. § 6621(c). Taxpayer seeks review of this order.

II. Discussion We review Tax Court decisions “in the same manner and to the same extent as decisions of the district courts in civil action s tried without a jury.” 26 U.S.C. § 7482(a)(1). Thus, we review purely factual issue s under a clearly erroneous standard, and we review purely legal questions de novo. See Twenty Mile Joint Venture, PND, Ltd. v. Commissioner , 200 F.3d 1268, 1275 (10th Cir. 1999). In Krause , following a fifteen-week hearing, the Tax Court i ssued a lengthy and comprehensive decision, holding that Electra/He misphere partnerships lacked a profit motive and upholding the Commissioner’s di sallowance of losses and assessments of increased interest. See 99 T.C. at 175-76. In an equally thorough affirmance, this court upheld the decision of the Tax Court. See Hildebrand , 28 F.3d at 1028. The Tax Court uses the show cause procedure in case s where, as here, the decision on the instant case may be affected by a p reviously decided test case. See Acierno v. Commissioner , 74 T.C.M. (CCH) 738 (1997) (citing example cases), aff’d , 185 F.3d 861 (3d Cir. 1999) (table). In conformi ty with this procedure, the Tax Court issued an order directing taxpayer to show cause as to1 Labeling the Tax Court’s settlement offers as “arbi trary” and “capricious,”

taxpayer also asserted that he had not previously s ettled his case because he was not afforded the same favorable terms of settlementoffered to other investors. R. Status Report dated July 15, 1999. The Tax Court d id not address this contention in its order making the show cause order absolute. Because taxpayer did not raise this issue on appeal, the issue is deemed waived. See State Farm Fire & Cas. Co. v. Mhoon , 31 F.3d 979, 984 n.7 (10th Cir. 1994) (holding th at failure to raise issue in opening brief waives the issue).-4- why a decision in his case should not be entered inaccordance with the Tax Court’s decision in Krause , which also involved Elektra/Hemisphere cases. See R. Order dated May 14, 1999. The court advised taxpayer that, if issues remained which were not resolved by Krause , he needed to inform the Tax Court of those issues. See id. In his response, taxpayer argued that if given th e opportunity to conduct discovery, he would be able to successfullydistinguish his case from Krause . He asserted that he had not started discovery du e to “his attempt to resolve the case” outside of litigation. 1 Id. Status Report dated July 15, 1999. The Tax Court found his response insufficient and e ntered an order upholding the Commissioner’s deficiency assessments. On appeal, taxpayer argues that he was denied proce dural due process when the Tax Court failed to hold an evidentiary hearing prior to ruling in favor of the Commissioner. Procedural due process requires noti ce and an opportunity to be heard. See Mullane v. Central Hanover Bank & Trust Co. , 339 U.S. 306, 313-14 (1950) (holding that “at a minimum” due process “re quire[s] that deprivation of2 The record on appeal is unclear as to why this case languished in Tax Court

from August 1988 until the decision was entered in September 1999. The Tax Court docket sheet indicates that an earlier order to show cause was issued in July 1992, amended in August 1992, and discharged in Nov ember 1992. The docket does not indicate further activity until the secondorder to show cause was issued in May 1999. -5- life, liberty or property by adjudication be preced ed by notice and opportunity for hearing appropriate to the nature of the case”). However, a hearing is not necessarily required in order to satisfy due process. See Cafeteria & Restaurant Workers, Local 473 v. McElroy , 367 U.S. 886, 894-95 (1961). “An elementary and fundamental requirement of due process in any p roceeding which is to be accorded finality is notice reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the a ction and afford them an opportunity to present their objections.” Mullane , 339 U.S. at 314 (citations omitted). Here, taxpayer had notice of the court’s intent to decide his case pursuant to Krause , and an opportunity to object to this disposition with enough specificity to convince the court that his case may be distinguishable. Krause was decided in 1992, and affirmed by this court in 1994. The Tax Court’s order to show cause was not issued until May 1999. 2Taxpayer, therefore, had ample time and opportunity to do the discovery he perceived necess ary in order to support his contention that his case was distinguishable from Krause. This he failed to do.-6-

Given these circumstances, we conclude that the TaxCourt disposition of taxpayer’s petition without a hearing did not violate due process. See, e.g ., Knighten v. Commissioner , 702 F.2d 59, 61 (5th Cir. 1983) (holding if petit ioner fails to assert any factual dispute and all his leg al arguments are clearly meritless, “there is simply no point in having [a hearing]. T he Constitution does not require such futile exercises.”). The petition for review is GRANTED, and the decision of the Tax Court is AFFIRMED.

Entered for the Court

Wade Brorby Circuit Judge