- 6 - prepare their 1996 return. Petitioners signed but did not review the 1996 return as prepared by Mr. Nunez. D. The Notice of Deficiency In the notice of deficiency, respondent determined that petitioners overstated the fair market value of their noncash charitable contributions. In the notice, respondent determined that the fair market value of the Winter Haven property was $155,000 and that the fair market value of the boat was $500. Thus, respondent disallowed $54,500 ($45,000 for the Winter Haven property and $9,500 for the boat) of petitioners’ $110,000 noncash charitable contributions for 1996.3 Discussion In general, the determinations of the Commissioner in a notice of deficiency are presumed correct, and the burden is on the taxpayer to show that the determinations are incorrect. Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933).4 A. Charitable Contributions Section 170(a)(1) allows a deduction for charitable 3 At trial, petitioners and respondent agreed that the fair market value of the Winter Haven property was $183,000. Accordingly, petitioners are allowed a charitable deduction with respect to the Winter Haven property in the amount of $83,000 ($183,000 fair market value less the $100,000 sales price). 4 Sec. 7491 does not apply in this case to shift the burden of proof to respondent because petitioners neither alleged that sec. 7491 was applicable nor established that they fully complied with the requirements of sec. 7491(a)(2).Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Next
Last modified: May 25, 2011