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The basic issue in the instant case--whether the nonrecourse
debt should be included in the amount realized upon transfer of
the computer to the School--was not altered by the increase in
the deficiency asserted by respondent. Petitioners had full
opportunity to meet the claim for an increased deficiency because
it was apparent from the outset of this suit that respondent
included the "nonrecourse debt" in the amount realized by
petitioners from the transfer of the equipment, and they
themselves stipulated the document which showed that the debt was
$1,540,280 rather than $1,017,248, thus giving rise to the
corresponding assertion of an increased deficiency. We find that
justice requires that we allow respondent’s answer to be amended.
Rule 41(a).
Accordingly, respondent’s motion to amend her answer to
conform to the evidence so as to assert an increased deficiency
will be granted. Respondent has the burden of proving, however,
that petitioners are liable for the increased deficiency. Rule
142(a).
Issue 1. Income From the Disposition of the Equipment Leasing
Interest
Respondent asserts that petitioners’ amount realized from
the transfer to the School must include the obligation under the
FDC note as a consequence of the School’s assumption of the note.
Petitioners argue that the note was not assumed by the School
and, furthermore, that the note was illusory.
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