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property transferred, including the insurance renewal contract
rights with a zero basis.
The net capital gain to be recognized by petitioners under
these circumstances would be $249,000, consisting of the $60,009
account payable and $188,991 in excess debt assumed over the
total basis of property transferred.
Disputing respondent's contentions, petitioners filed two
motions to shift the burden of proof to respondent on the grounds
that (1) respondent's amended answer contained a new matter for
which respondent should have the burden of proof pursuant to Rule
142(a), and (2) respondent erroneously determined the boot
received in the section 351 transaction. Petitioners also filed
a motion to strike the notice of deficiency, alleging that the
notice of deficiency was arbitrary and erroneous. Petitioners'
motions were denied by order.
This case was eventually settled, and deficiencies were
stipulated in the amounts of $88,292, $4,044, and $1,323 for
taxable years 1991, 1992, and 1993, respectively. Petitioners
then filed a motion for an award of reasonable litigation costs
and a motion to determine prevailing party.
Discussion
Taxpayers may be awarded an amount for reasonable litigation
costs if they meet the requirements of section 7430. In order to
qualify for such an award, a party must: (1) Qualify as a
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