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transfer of assets and liabilities in a section 351 transaction
and therefore did not substantially prevail on the most
significant issue in the case.
We are puzzled by petitioners' unyielding attention to the
section 357(b) and (c) distinction. Petitioners filed a motion
to shift the burden of proof to respondent on the basis that the
Government's amendment to answer asserted gain under section
357(c) and contained a new matter and because the calculation of
gain to be recognized by petitioners was incorrect. This motion
was denied by order of this Court, determining that the section
357(c) gain was not a new issue in the case, and the burden of
proof did not shift to respondent. In light of this Court's
order, we shall not rule in favor of petitioners on a theory that
the section 357(c) issue was not encompassed by the notice of
deficiency. Our earlier ruling concluded that the section 357(c)
issue was indeed contemplated by the notice of deficiency, and we
decline to revisit the issue on petitioners' motion.
With respect to the amount in controversy, the parties
settled on tax deficiency amounts of $88,292, $4,044, and $1,323
for taxable years 1991, 1992, and 1993, respectively. These
settlement figures amount to 86 percent, 65 percent, and 100
percent of the total amounts determined in the notice of
deficiency. Therefore, petitioners have not shown that they are
the prevailing party with respect to either the amount in
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