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stipulated the estimates made by the four NFL teams and the
adjustment made by the partnership's accountant to arrive at a
$36,121,385 fair market value and basis for the player contracts.
That evidence was stipulated to provide background for the
factual scenario needed to address the section 1056 question.
Petitioner did not plan to offer expert testimony on value
because respondent's determination did not question the value of
the player contracts. Petitioner would have been required to
present additional evidence to address respondent's alternative
argument, raised for the first time at trial. Accordingly,
respondent bears the burden of proof with respect to the question
of whether partnership's valuation of the player contracts was
correct.
B. Respondent's Alternative Argument
Having decided that section 1056 does not apply to the sale
of a partnership interest, we address respondent's alternative
argument that the basis of the player contracts was incorrectly
computed under subchapter K. In this case, a distribution was
deemed to have occurred to Bowlen and the remaining partner
because of the section 708 constructive termination of the
partnership when Bowlen purchased over a 50-percent partnership
interest. Sec. 708(b)(1)(B); sec. 1.708-1(b)(1)(iv), Income Tax
Regs.
Section 732(d) and the regulations thereunder, with respect
to a liquidating distribution, require a basis adjustment in
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