- 35 -
Bertoli v. Commissioner, 103 T.C. 501, 511-512 (1994); Allen v.
Commissioner, T.C. Memo. 1988-166.
Respondent argues that even if Congress originally intended
acquisition cost as the proper measure of net worth, relatively
recent trends in generally accepted accounting principles (GAAP)
require that such a measure be abandoned. We have considered
respondent's arguments on this point and find them off the mark.
While there has been a change in the rules regarding the method
by which individuals prepare their financial statements, there
has been no change in the definition of acquisition cost under
GAAP, and as that was the standard set forth in the legislative
history, it is the measure of net worth we apply to this case.24
After careful review of the record, we find that petitioners
have adequately set forth a statement of their net worth pursuant
to Rule 231(b)(5) and have met the burden of proving that their
separate net worths did not exceed $2 million on the date they
filed their petition.
We have considered all other arguments raised by respondent
regarding the net worth requirement and, to the extent not
24
As noted by the Courts of Appeals for the Ninth and Seventh
Circuits, "the cost of acquisition" under GAAP is arrived at by
subtracting accumulated depreciation from the original cost of an
asset. American Pacific Concrete Pipe Co., Inc. v. NLRB, 788
F.2d 586, 590-591 (9th Cir. 1986); Continental Web Press, Inc. v.
NLRB, 767 F.2d 321, 322-323 (7th Cir. 1985). We do not here
decide whether depreciation should be used in determining net
worth for purposes of sec. 7430(c)(4)(A), as petitioners'
separate net worths, whether computed using depreciation or not,
do not exceed $2 million.
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