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bear the burden of proving that the deposits into their accounts
during 1989 and 1990 do not constitute unreported income. Re-
spondent conceded at the conclusion of the trial herein that
petitioners had satisfied that burden with respect to the depos-
its of the Kabeiseman loans during 1989. Respondent, however,
advanced as an alternative argument in her opening statement and
as the sole argument at the conclusion of the trial herein and on
brief a new theory as to why petitioners have $19,310.20 of
unreported income for 1990, viz., unreported income resulting
from the discharge or forgiveness by Mr. Kabeiseman during that
year of the outstanding balances of the Kabeiseman loans (viz.,
$19,310.20). That new theory does not merely serve to develop
respondent's theory in the notice that, under the bank deposits
method, all money deposited into petitioners' accounts during
1990 constitutes unreported income for that year (except money so
deposited that respondent knows (1) is not taxable or (2) is
income that petitioners previously reported in their return for
that year). Accordingly, on the record before us, we sustain
petitioners' contention that respondent has raised a matter as to
which she bears the burden of proof in arguing that petitioners
have unreported income for 1990 resulting from the discharge of
the outstanding balances of the Kabeiseman loans.17
17 We note that on the record before us our findings and conclu-
sions with respect to respondent's argument that petitioners have
unreported income for 1990 resulting from the discharge of the
(continued...)
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