David C. Hutchinson, et al. - Page 17

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               Petitioners also contend that the issue of whether VRI’s               
          Clubhouse construction costs would have been recoverable by VRI             
          through depreciation represents a new factual issue under Rule              
          142(a) and that respondent should bear the burden of proof with             
          regard thereto.                                                             
               Respondent contends that ownership of the Clubhouse was held           
          by VRI during construction from 1994 through the transition                 
          period and until April 21, 1999, when the deed to the Golf Course           
          and to the Clubhouse was transferred out of escrow to VCI, and              
          therefore that VRI had a depreciable interest in the Clubhouse.             
               Generally, for the years in issue, the burden of proof is on           
          the taxpayer with regard to factual issues.  Rule 142(a),                   
          however, states that in the case of any “new matter” the burden             
          of proof shall be upon respondent.  In Wayne Bolt & Nut Co. v.              
          Commissioner, 93 T.C. 500, 507 (1989), we summarized the                    
          distinction between new theories that are treated as new issues             
          and new theories that simply supplement previously raised issues            
          as follows:                                                                 

                    A new theory that is presented to sustain a                       
               deficiency is treated as a new matter when it either                   
               alters the original deficiency or requires the                         
               presentation of different evidence.  A new theory which                
               merely clarifies or develops the original determination                
               is not a new matter in respect of which respondent                     
               bears the burden of proof.  [Citations omitted.]                       

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