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Petitioner argues that there is no gain to be recognized from the
transfers because the Bales v. Commissioner, supra, decision does
not apply to this class of cattle. We disagree.
The language of the Bales v. Commissioner, supra, decision
is not as narrow as petitioner argues. The Court in Bales found
the following facts: "As for culled cattle used to pay principal
on the notes, we do have some indication that the partnerships
sold culled cows to Hoyt & Sons. These are cattle which did not
fit the program. Many were heifers which did not become
pregnant." Bales v. Commissioner, T.C. Memo. 1989-568. Thus the
terms "culled cattle" and "culled cows" as used in Bales included
heifers.
Moreover, petitioner has stipulated that the cattle
transferred had a zero basis. Thus the transfers result in
ordinary income to the partnerships regardless of whether the
cattle are heifers or culled cows and calves. A stipulation may
be set aside where it is clearly contrary to the facts disclosed
on the record. Cal-Maine Foods, Inc. v. Commissioner, 93 T.C.
181, 195 (1989). The evidence offered by petitioner consists of
bills of sale from the partnerships to the Ranches corresponding
to the cattle that petitioner claims were transferred in payment
on the notes. The bills refer to the cattle as "registered
shorthorn heifers." The bills of sale do not indicate the
partnerships' basis in any of the cattle. The facts on the
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