Peter S. Peracchio - Page 9

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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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