Robert W. and Jennifer J. Fritz - Page 8

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          will.  Under section 1014, the correct basis in these shares is             
          $10.125 per share.  See sec. 1014(a).  Therefore, we sustain                
          respondent's determination.4                                                

          Addition to Tax for Failure to File a Timely Return                         

               Petitioners filed a delinquent return for the 1985 taxable             
          year, and respondent determined that they are liable for an                 
          addition to tax under section 6651(a)(1).  Petitioners bear the             
          burden of proof on this issue.  Abramo v. Commissioner, 78 T.C.             
          154, 163 (1982).  Petitioners did not address this issue on                 
          brief, nor is there any evidence in the record that would lead us           
          to conclude that petitioners had a reasonable excuse for not                
          filing their 1985 return until April 20, 1987.  See sec.                    
          6651(a)(1).  Thus, we sustain respondent's determination.                   

          4We note that these stock sales were not reported on                        
          petitioners' 1985 return and that Louis R. DePretis, who prepared           
          petitioners' 1985 return, testified that petitioners initially              
          concealed their stock transactions for 1985.  Mr. DePretis                  
          testified that "Mr. Fritz had [originally] indicated that there             
          were no stock transactions during these years that were being               
          audited.  I had asked [respondent's revenue agent] Mr. Torri                
          after the meeting if he had evidence to the contrary and he said            
          he did in fact."  Mr. DePretis continued:  "I therefore then got            
          back ahold[sic] of the Fritzes * * *.   Mrs. Fritz or Mr. Fritz             
          handed me a transaction that showed they sold 200 shares of                 
          Columbia Gas as being the only transaction for 1985."   Mr.                 
          DePretis testified that this sale of 200 shares of Columbia Gas             
          produced a capital gain of $1,200.  Mr. DePretis thought that the           
          Columbia Gas transaction was petitioners' sole transaction for              
          1985 because petitioners presented to Mr. DePretis a statement              
          dated Dec. 31, 1985; however, it only contained transactions from           
          the month of December.                                                      

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