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In Shea v. Commissioner, 112 T.C. 183 (1999), we considered
whether a theory raised by the Commissioner for the first time on
brief was “new matter” on which the Commissioner had the burden
of proof. After discussing section 7522, we held that where the
Commissioner relied on a basis that was not stated in the
statutory notice and that required the presentation of different
evidence, the new basis was new matter for purposes of Rule 142.
We need not consider this question further in the case at
hand. As we explain in our discussion of the substantive issues
immediately below, the record establishes that $103,420 of the
$104,786 paid to Universal was petitioner’s income under the
assignment of income rule. We would reach the same result no
matter who had the burden of proof on respondent’s theories.11
III. Does Petitioner’s Income Include the $103,420 Paid to
Universal?
According to documents executed in June 1990, petitioner
transferred his “knowledge, talent, ability and labor” to
Universal, in exchange for certain “capital units” in Universal.
Respondent claims that petitioner’s attempt to transfer his
“knowledge, talent, ability and labor” to Universal was an
archetypical example of an invalid “assignment of income”, under
11 The record also establishes that $1,341 of the $104,786
paid to Universal was paid for work done by Ms. Ghavami.
Respondent has conceded that this $1,341, and the remaining $25
deposited in the Universal account, were not income to
petitioner.
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