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liability through their lockup agreement. Respondent contends
that there is no provision that allows individuals or
corporations to voluntarily extend section 16(b) liability.
1. Is the Burden of Proof on Respondent?
As a preliminary matter, petitioner argues that the burden
of proof is on respondent because respondent issued a notice of
deficiency based solely upon a Form 1099 issued by Polyphase,
rather than conduct an examination of petitioner. Petitioner
argues that Portillo v. Commissioner, 932 F.2d 1128 (5th Cir.
1991), revg. T.C. Memo. 1990-68, and 988 F.2d 27 (5th Cir. 1993),
revg. T.C. Memo. 1992-99, and sections 7491(a) and 6201(d) place
the burden on respondent.
We do not find that the resolution of this case depends on
which party has the burden of proof. We resolve the issues on
the basis of a preponderance of evidence in the record. Assuming
arguendo that respondent does have the burden of proof, we still
conclude, on the basis of evidence in the record, that petitioner
had $728,000 of additional income, for the reasons outlined
below.
2. Section 83(a)
Section 83(a) generally provides that when property is
transferred to a taxpayer in connection with the performance of
services, the fair market value of the property at the first time
the taxpayer’s rights in the property are transferable or not
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