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Petitioner bears the burden of proof.5 Rule 142(a)(1).
II. Law
Section 2501(a) imposes a tax on the transfer of property by
gift. Section 2512(a) provides that, if a gift is made in
property, the value of the property on the date of the gift is
considered the amount of the gift. Section 25.2512-1, Gift Tax
Regs., provides that the value of property for Federal gift tax
purposes is “the price at which such property would change hands
between a willing buyer and a willing seller, neither being under
any compulsion to buy or sell, and both having reasonable
knowledge of relevant facts.” The willing buyer and willing
seller are hypothetical persons, rather than specific individuals
or entities, and their characteristics are not necessarily the
same as those of the donor and the donee. Estate of Newhouse v.
Commissioner, 94 T.C. 193, 218 (1990) (citing Estate of Bright v.
5 Petitioner does not raise the applicability of sec.
7491(a), which operates to shift the burden of proof to the
Commissioner in certain circumstances. See Rule 142(a)(2).
However, petitioner argues for the first time in his posttrial
reply brief that, under general principles of Federal tax law,
respondent bears the burden of proof on the ground that the
notice of deficiency is arbitrarily excessive and without
foundation. As petitioner did not timely raise that issue, we
decline to consider it. See, e.g., Graham v. Commissioner, 79
T.C. 415, 423 (1982) (“It is well settled that this Court will
not consider issues raised for the first time on brief when to do
so prevents the opposing party from presenting evidence or
arguments that might have been presented if the issue had been
timely raised.”).
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