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the total adjustment, petitioner contends in its second motion
that the burden of proof with respect to the $151,382 should
shift to respondent.
A hearing was held on both motions. At the hearing, neither
party presented any witnesses, and no documentary information was
submitted into evidence. The hearing consisted solely of the
arguments of counsel.
It is undisputed that, sometime after petitioner's 1991
return was filed, an engineer agent with the Internal Revenue
Service (IRS) issued to petitioner an information document
request with respect to the $658,000 expenses referred to in the
disclosure statement, requesting an itemization of the expenses
comprising the $658,000 and documentation to support the claimed
expenses. Petitioner replied with the following itemization:
Lane & Waterman--legal advice $473,453
Lane & Waterman--legal advice 565
KPMG--comfort letter 17,350
KPMG--tax opinion 15,250
Unidentified 151,382
Total $658,000
No documentation was provided the IRS agent to support the
$151,382 unidentified costs.
Petitioner contends that the $151,382, described in the
above itemization as "Unidentified" costs, was included by error
in the $658,000 of expenses referred to on the disclosure
statement and that only $506,618 was incurred and claimed as a
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