Supreme Court of the United States

“ Indeed, a special trial judge's findings of fact are subject to the same level of deference given by a district court judge to a special master's report. A special trial judge's findings are "presumed to be correct," and a special master's findings of fact are not to be set aside "unless clearly erroneous." ”

“ Tax Court review may actually compare unfavorably even with review by a court of appeals. At least a court of appeals is briefed on the issues raised by the court below. In a Tax Court proceeding, the parties have no opportunity to file objections to the special trial judge's report.
3. The Tax Court rules must allow the parties to file objections and the judge must hold a hearing on those objections under procedures similar to those provided in the Federal Rules of Civil Procedure for the district court review of special master and magistrate reports. ”

“ On September 3, 1991, Erhard filed a motion for reconsideration on two legal issues. He contended that, even assuming the correctness of the sham determination, the Tax Court erred in denying him any depreciation on the purchased assets or any deductions for interest actually paid on the disputed loans, and in upholding the substantial understatement of tax penalty and tax-motivated interest. On September 3, 1991, Judge Scott held a hearing on Erhard's motion for reconsideration. ”