947 F. 2d 950 - Petti v. Commissioner Internal Revenue Service

MEMORANDUM**

This is an appeal from the Tax Court's ruling that the Commissioner had waived or abandoned his claim for additions to tax for fraud by, inter alia, failing to expressly reargue the claim in his post-trial reply brief. We reverse on this point and remand for further proceedings.

As general propositions, an argument should not be deemed to have been waived except when the party advancing the argument utterly failed to bring it to the court's attention at the outset, and an argument should not be deemed to have been abandoned except when the party's words and actions point clearly in that direction. See, e.g., Thompson v. Commissioner, 631 F.2d 642, 649 (9th Cir.1980) (issue first presented in reply brief deemed waived), cert. denied, 452 U.S. 961 (1981); Ferenc v. Commissioner, 33 T.C.M. (CCH) 136, 136 n. 1 (1974) (issue raised in petition but not reasserted later at trial or in post-trial briefs deemed abandoned). Because the Commissioner raised the issue of fraud additions to tax before trial, presented evidence thereon at trial, and reasserted the argument in his post-trial opening brief, the Tax Court's conclusion that the Commissioner had waived the issue by, inter alia, not expressly rearguing it in his reply brief is unwarranted.

Accordingly, the decision of the Tax Court is REVERSED with respect to its finding that the Commissioner had waived or abandoned his claim for additions to tax for fraud, and this case is REMANDED for a determination on the merits of that claim.