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values of the limited partnership interests that petitioner
transferred during 1996. The parties generally agree that these
fair market values should be determined by reference to the net
asset values (NAVs) of the partnership’s assets (i.e., its real
estate holdings and marketable securities portfolio), reduced by
minority interest and marketability discounts. The parties agree
on the NAVs of the partnership’s assets.3 They disagree on the
size of the applicable minority interest and marketability
discounts. Petitioner bears the burden of proof. See Rule
142(a).4
3 At trial, petitioner agreed to use respondent’s (overall
slightly higher) figures for the NAVs of the partnership’s
securities portfolio: $1,296,882 as of Apr. 19, 1996, and
$1,379,531 as of July 2, 1996. The parties also agree that the
fair market value of the partnership’s real estate holdings was
$1,860,000 at all relevant times. This agreed-upon value of the
real estate is based on an appraisal report dated Jan. 24, 1996,
and represents the market value of the leased fee estate as
determined by an independent appraiser using a discounted
cashflow analysis.
4 Effective for court proceedings arising in connection with
examinations commencing after July 22, 1998, if certain
requirements are met, sec. 7491(a) shifts to the Commissioner the
burden of proof with respect to factual issues relevant to
ascertaining the tax liability of the taxpayer. Internal Revenue
Service Restructuring and Reform Act of 1998 (RRA 1998), Pub. L.
105-206, sec. 3001(a), 112 Stat. 726. Respondent asserts and
petitioner does not dispute that respondent’s examination of
petitioner’s 1996 gift tax return commenced in 1997.
Accordingly, the burden-shifting provisions of sec. 7491(a) are
inapplicable here.
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