R. Edwin Brown and Winsome S. Brown - Page 9

                                        - 9 -                                         
               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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