Bill L. and Patricia M. Spencer - Page 31

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          expense would have offset each other on their Federal income tax returns.   
               Generally, we treat stipulations as conclusive admissions by           
          the parties, and we do not permit a party to change or contradict           
          a stipulation, except in extraordinary circumstances.  Rule                 
          91(e); Jasionowski v. Commissioner, 66 T.C. 312, 318 (1976).  We            
          find no extraordinary circumstances present in the instant case             
          to cause us to disregard the parties' stipulation concerning the            
          form of the transactions in issue.  Substance, however, is not              
          established by mere proof of form.  Wichita Terminal Elevator Co.           
          v. Commissioner, 6 T.C. 1158, 1164 (1946), affd. 162 F.2d 513               
          (10th Cir. 1947).  The Government is not bound by the form chosen           
          and may recharacterize the nature of the transaction according to           
          its substance while overlooking the form selected by the                    
          taxpayer.  Don E. Williams Co. v. Commissioner, 429 U.S. 569,               
          579-580 (1977); Higgins v. Smith, 308 U.S. 473, 477 (1940).                 
          Although the parties stipulated the form of the transactions in             
          issue (i.e., that petitioners purchased assets from SSI and then            
          later conveyed those same assets to SPC-SC and SPC-FL),                     
          respondent did not stipulate that the form of the transaction               
          matched its substance.  Accordingly, we conclude that                       
          respondent's stipulation does not prevent respondent from arguing           
          that the substance of the transaction prevails over its form.               
               Many of the stipulated facts evince petitioners' failure to            
          respect the form of the transactions they advocate.                         

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