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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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