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pleadings to the proof. Id. If we were to allow respondent to
claim the increased deficiency for the first time on brief,
petitioner would be deprived of the opportunity to present
evidence to controvert whatever evidence respondent relies upon
to sustain his burden of proving the new matter. Respondent is,
therefore, limited to the determination of gain contained in the
notice of deficiency. Commissioner v. Transport Manufacturing &
Equip. Co., 478 F.2d 731 (8th Cir. 1973), affg. Riss v.
Commissioner, 56 T.C. 388 and 57 T.C. 469 (1971); Fox Chevrolet,
Inc. v. Commissioner, 76 T.C. 708 (1981); Rubin v. Commissioner,
56 T.C. 1155, 1163 (1971), affd. 460 F.2d 1216 (2d Cir. 1972).
Gross income includes discharge of indebtedness, sec.
61(a)(12), and gains derived from dealings in property, sec.
61(a)(3). Under section 61(a)(12), a taxpayer realizes income
when a creditor discharges nongratuitously all or a portion of a
taxpayer's debt. Sec. 61(a)(12); sec. 1.61-12(a), Income Tax
Regs.
For purposes of section 61(a)(3), section 1001 and the
regulations thereunder govern the method by which the amount of
gain or loss realized upon a sale or disposition of property is
calculated. The amount of gain realized is the excess of the
amount realized over the taxpayer's adjusted basis in the
property, and the amount of loss realized is the excess of the
adjusted basis over the amount realized. Sec. 1001(a). The
"amount realized" is defined by section 1001(b) as the sum of any
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