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Kabeiseman during 1990.
Petitioners assert on brief (1) that respondent's arguments
at trial and on brief that petitioners have unreported income for
1989 and 1990 resulting from the deposits of funds misappropri-
ated from K & H and Ms. Velilla and for 1990 resulting from the
discharge of the outstanding balances of the Kabeiseman loans
raise matters that are not properly before the Court and
(2) that, assuming arguendo that such matters were properly
before the Court, respondent has the burden of proof as to such
matters. To support their assertions, petitioners point out that
respondent stated in the notice that certain deposits into
petitioners' accounts during the years at issue constitute
unreported income for those years from "real estate sales of a
general contracting business" or "from contracting", and not from
misappropriated funds or the discharge of indebtedness. Respon-
dent disagrees, pointing out, inter alia, that respondent's
arguments about which petitioners complain are properly before
the Court because petitioners were in no way prejudiced or
unfairly surprised by them.
With respect to the parties' disagreement over whether
respondent is raising certain matters not properly before this
Court, we note initially that, regardless how we resolve that
disagreement, petitioners nonetheless bear the burden of proving
that all the deposits at issue are not taxable or that they
represent income that they previously reported. See Calhoun v.
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