- 39 -
also provided a short analysis of legal authorities governing the
determination of a partner’s basis. At trial, testimony was
elicited from various witnesses as to Russell’s basis in BBP and
whether he withdrew amounts in excess of his basis. Finally,
both parties specifically addressed this issue in their opening
and reply briefs. Thus, we find that this issue was tried by the
implied consent of the parties.
As a general rule, the Commissioner’s determination bears a
presumption of correctness, and the burden of proof rests with
the taxpayer.24 Rule 142(a); Welch v. Helvering, 290 U.S. 111,
115 (1933). However, section 7522 requires that a notice of
deficiency “describe the basis” for the tax deficiency. In
certain circumstances, the failure to “describe the basis” for
the tax deficiency results in the raising of a new matter under
Rule 142(a). Shea v. Commissioner, 112 T.C. 183, 197 (1999);
Wayne Bolt & Nut Co. v. Commissioner, 93 T.C. 500, 507 (1989).
In Shea v. Commissioner, supra at 197, we stated:
We have previously held that new matter is raised
when the basis or theory on which the Commissioner
relies was not stated or described in the notice of
deficiency and the new theory or basis requires the
presentation of different evidence. Wayne Bolt & Nut
Co. v. Commissioner, 93 T.C. at 507. This rule for
determining whether a new matter has been raised by the
Commissioner is consistent with, and supported by, the
statutory requirement that the notice of deficiency
24As we noted earlier, it has not been established that the
examination of Russell and Clarice began after July 22, 1998, or
that sec. 7491 applies. See supra note 14.
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