James M. Rankin and Shirley Rankin - Page 13

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          testimony concerning whether a recovery would occur on the                  
          termination of petitioner’s relationship with Associated; and (3)           
          respondent should bear the burden of proof with respect to the              
          applicability of the tax benefit rule.                                      
               We do not consider petitioners to be prejudiced by                     
          respondent’s limited and responsive reliance on the tax benefit             
          rule.  We note that petitioners have placed in evidence their tax           
          returns from 1970 through 1988 (petitioners could not produce               
          copies of their 1968 and 1969 returns) and the surety ledgers for           
          the BUF accounts in issue, which permits as complete an                     
          evaluation as practical of the extent of any tax benefit                    
          resulting from the deductions claimed by petitioners.  We also              
          consider petitioners to have been aware of the relevance of the             
          tax benefit rule to the instant case.  In their opening brief,              
          petitioners discuss whether the balances of petitioner’s BUF                
          accounts must be included in income when the accounts are closed            
          and attempt to distinguish Knight-Ridder Newspapers, Inc. v.                
          United States, 743 F.2d 781, 799 (11th Cir. 1984), which noted              
          that the previously deducted balance of a reserve account is to             
          be included in income when the account ceases to be used.  The              
          portion of Knight-Ridder Newspapers that petitioners attempt to             
          distinguish is based on an application of the tax benefit rule.             
              We further fail to see the value of expert testimony on the            
          matter of whether a recovery would occur on the refunding of the            
          BUF account balances to petitioner.  Finally, by relying on the             




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