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Petitioners’ Position Regarding the Burden of Proof
Respondent advances the following alternative theories or
principles in support of the determination in the notice to
increase petitioners’ Schedule C gross receipts for 1995:
(1) The assignment of income theory; (2) sham trust principles;
and (3) the grantor trust rules found in sections 671-679 (gran-
tor trust rules). The notice did not expressly mention any of
the foregoing theories or principles. Consequently, according to
petitioners, those theories and principles are new matters under
Rule 142(a) on which respondent has the burden of proof.
We need not decide whether petitioners’ position that
respondent has the burden of proof regarding the alternative
theories advanced by respondent in support of the determination
in the notice to increase petitioners’ Schedule C gross receipts
for 1995 is correct. The record establishes that petitioners had
unreported 1995 Schedule C gross receipts from Barbara’s Gift
Shop and Barmes Wholesale in the amount determined by respondent
in the notice. We would reach the same result no matter who has
36(...continued)
total gross receipts, the result would be $5,740,546 (i.e., the
1995 gross profit determined in the notice of $2,766,943 divided
by 48.2 percent). The recalculated total gross receipts for
1995, determined by using the 1994 percentage of gross profit to
total 1994 reported gross receipts, is remarkably close to the
total sales of $5,799,767 that Mr. Barmes reported in the Indiana
business tangible personal property assessment return as the
total sales of Barbara’s Gift Shop and Barmes Wholesale for 1995.
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