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been stipulated by the parties and where the issue upon which the
liability for both the original and the increased deficiencies
depends is the same, we think that respondent has made a timely
claim for the increased deficiencies and see no reason to
preclude our consideration of such increases. See Pallottini v.
Commissioner, 90 T.C. 498, 500 (1988); cf. Law v. Commissioner,
84 T.C. 985, 989 (1984).6 Indeed, as we understand petitioner's
position, it does not oppose such consideration except in the
context of its contention that the burden of proof should in any
event be shifted to respondent under Rule 142(a).
Burden of Proof
Petitioner argues that the notices of deficiency refer only
to section 1441, so that reliance by respondent on section 1442
constitutes a new matter on which respondent has the burden of
proof under Rule 142(a). That burden of proof would, according
to petitioner, require respondent to prove that, during the years
in issue, SDI Bermuda was not engaged in a trade or business
within the United States or, if so engaged, that the royalties
received from petitioner by SDI Bermuda were not effectively
connected with such trade or business7; if SDI Bermuda were so
6 See also Brown v. Commissioner, T.C. Memo. 1996-325; cf.
Wicker v. Commissioner, T.C. Memo. 1993-431, affd. without
published opinion 50 F.3d 12 (8th Cir. 1995).
7 Petitioner makes a further reference to placing the burden of
(continued...)
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