- 13 - respondent’s new contentions. Respondent counters that under our Rules the new contentions should be treated only as new theories, not as new issues, and that the burden of proof should remain with petitioners on all factual matters. Discussion Generally, under Rev. Proc. 75-25, 1975-1 C.B. 720 (Rev. Proc. 75-25), a real estate developer was allowed, in the first year of construction of a development, to allocate to the developer’s cost bases in separate lots to be sold certain estimated construction costs of improvements common to the entire development. The purpose of Rev. Proc. 75-25 was to allow a real estate developer to spread more evenly and fairly the amount of the developer’s gain or loss relating to a real estate development over the years of construction. By allocating, at the beginning of a development, estimated construction costs relating to common improvements to the developer’s cost bases in lots to be sold, a developer was able to recognize less income in the early years of a development as lots were being sold (as a result of the increased cost bases in the lots on which the developer’s taxable gain was computed). In Herzog Bldg. Corp. v. Commissioner, 44 T.C. 694, 702-703 (1965), involving a predecessor ruling to Rev. Proc. 75-25,3 we 3 Mim. 4027, XII-1 C.B. 60 (1933).Page: Previous 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Next
Last modified: May 25, 2011