56 T.C. 763">*763 SUPPLEMENTAL1971 U.S. Tax Ct. LEXIS 101">*102 OPINION

On December 10, 1970, we filed our opinion in this case, 55 T.C. 441">55 T.C. 441, wherein we held, in part, that Ray A. Maher (hereinafter sometimes referred to as Ray) had received a constructive dividend in 1963 when Selectivend Corp. (hereinafter sometimes referred to as Selectivend) assumed payments on his personal promissory notes.

On January 12, 1971, petitioners filed a "Motion For Reconsideration And Amendment of Findings and Conclusions of Law and Opinion" in which they requested leave to file an additional brief on the constructive-dividend issue pursuant to Rule 19(e), Tax Court Rules of Practice. They alleged in their motion that:

56 T.C. 763">*764 1. Docket No. 2916-67 for the year 1963 was first set for trial before the Tax Court on February 17, 1969. On December 11, 1968, respondent's counsel called petitioners' co-counsel, A. Henry Cuneo, by telephone and stated that respondent was willing to concede that petitioner did not receive a constructive dividend in 1963, when he assigned his contract to Selectivend to acquire the stock of Selvex, provided petitioner would join respondent in a request for continuance, so that the transactions in the later1971 U.S. Tax Ct. LEXIS 101">*103 years could be joined with the year 1963 and considered at the same time in one trial. This petitioner agreed to do.

We set a hearing for March 3, 1971, to consider arguments and any evidence concerning the above alleged agreement. At the hearing we determined to our satisfaction that no such agreement or concession had been made; however, we granted petitioners' motion to file an additional brief for the limited purpose of further argument concerning the year or years in which a constructive dividend should be considered to have been received by Ray.

In their brief, petitioners argued only that section 301(b) (2) of the Internal Revenue Code of 1954 precluded any taxation on Selectivend's distribution to Ray. That section states:

SEC. 301(b) (2). Reduction for liabilities. -- The amount of any distribution determined under paragraph (1) shall be reduced (but not below zero) by --

(A) the amount of any liability of the corporation assumed by the shareholder in connection with the distribution, and

(B) the amount of any liability to which the property received by the shareholder is subject immediately before, and immediately after, the distribution.