Caralan Trust, et al. - Page 23




                                       - 23 -                                         
               In the answer, respondent denies:                                      
               that said trusts were “valid” to the extent that                       
               petitioners intend the term to imply that the trusts                   
               should be recognized for federal income tax purposes;                  
               or alternatively, to imply that the trusts are not                     
               grantor trusts; or alternatively, to imply that the                    
               income reported by the trusts is not taxable to                        
               petitioners under assignment of income principles.                     
               On brief, respondent states the following grounds for                  
          attributing gross receipts of Alexion Trust to the J. Shirleys:             
          “on the grounds that Alexion Trust is a sham, or that Alexion               
          Trust is a grantor trust, or that the income of Alexion Trust is            
          taxable to Joseph and Frances Shirley under assignment of income            
          principles.”  As to the depreciation deduction, respondent states           
          the issue to be whether the J. Shirleys are entitled to the                 
          depreciation expense passed through to them from the Caralan                
          Trust.                                                                      
               Apparently, at the time the notice was issued to the                   
          J. Shirleys, they and respondent understood respondent’s grounds            
          for making the two adjustments in question; both parties filed              
          pleadings and briefs which responded to those adjustments.  Rule            
          142(a) provides that respondent bears the burden of proof with              
          respect to new matters.  The J. Shirleys have not claimed that              
          respondent has raised any new matter.  We therefore assume that             
          respondent’s grounds for making the two adjustments are the                 
          grounds articulated by respondent on brief and that they raise no           
          new matter.  The J. Shirleys bear the burden of proof.  See Rule            






Page:  Previous  13  14  15  16  17  18  19  20  21  22  23  24  25  26  27  28  29  30  31  32  Next

Last modified: May 25, 2011