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Petitioner’s amount realized from the distribution of the
condominium units should be reduced by the amount of the
corporation's liabilities to the Posas, Fosses, and Navars that
petitioner agreed to assume, and for whose discharge he made the
necessary arrangements. Thus, after subtracting the assumed
liabilities of $68,000 from the $92,380 gain ($133,830 amount
realized minus $41,450 adjusted basis), petitioner’s realized
capital gain is $24,380.
IV. Additions
A. Section 6653(a) negligence addition
Respondent determined that petitioner is liable for an
addition to tax for negligence pursuant to section 6653(a).
Section 6653(a)(1) imposes an addition to tax of 5 percent of the
portion of the underpayment to which section 6653 applies.
15(...continued)
Camelot Court Development, Inc., and a 50-percent interest in
Camelot Court Development, Inc. II). Petitioner objected to
their introduction into evidence, because they had not been
submitted to petitioner prior to trial, contrary to our Standing
Pretrial Order, for incorporation in the stipulation of facts
under Rule 91. Respondent did not request leave to amend her
answer to assert an additional deficiency for these amounts, and
did not make any argument on brief that we should treat them as
taxable distributions or as reductions in the basis of
petitioner's stock. Respondent maintained at trial that the
documents were offered for impeachment purposes only, under Fed.
R. Evid. 607, as an exception to Rule 91 and the Standing
Pretrial Order, and we so regard them.
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