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argument that petitioners have unreported income for 1990 result-
ing from the discharge of the outstanding balances of the
Kabeiseman loans, certain documents in the record indicate that
questions regarding that matter were raised prior to trial by
respondent, after petitioners had informed respondent that
certain deposits totaling $29,000 during 1989 consisted of two
loans that Mr. Kabeiseman had made to petitioner. On the record
before us, we find that respondent's arguments that petitioners
have unreported income for 1989 and 1990 resulting from the
deposits of misappropriated funds and for 1990 resulting from the
discharge of the outstanding balances of the Kabeiseman loans are
properly before us.
With respect to the parties' disagreement over whether
respondent bears the burden of proof on the two matters in
question, we shall deal with each of those matters separately
because we view them differently. Although a taxpayer generally
has the burden of proving that respondent's determinations in the
notice of deficiency are erroneous, respondent bears the burden
of proving any new matter that was not raised in that notice.
See Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933);
Foster v. Commissioner, 80 T.C. 34, 197 (1983), affd. in part and
vacated in part by 756 F.2d 1430 (9th Cir. 1985). The assertion
of a new theory that merely clarifies or develops the original
determination without (1) being inconsistent with that determina-
tion, (2) increasing the amount of the deficiency, or (3) requir-
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