Tibor Guenther Horwath and Christel Horwath - Page 12

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          section 6662(a).                                                            
                                       OPINION                                        
               Petitioners bear the burden of proving that the determina-             
          tions in the notice are erroneous.3  See Rule 142(a); Welch v.              
          Helvering, 290 U.S. 111, 115 (1933).                                        
          Claimed Depreciation Deductions                                             
               Petitioners no longer contend that they are entitled to the            
          respective depreciation deductions that they claimed in petition-           
          ers’ 1997 return and petitioners’ 1998 return.  That is because,            
          according to petitioners:  (1) SDC transferred the computer                 
          simulator to TGC by gift; (2) SDC’s alleged gift of the computer            
          simulator to TGC was a gift to petitioners as the stockholders of           
          TGC for purposes of determining any depreciation deductions                 
          allowable with respect to that simulator; (3) pursuant to section           
          1015(a), petitioners’ basis in that simulator for such purposes             
          is SDC’s cost of, and thus its basis in, that simulator; and                
          (4) SDC’s cost of, and thus its basis in, the computer simulator            


               3The parties do not address the application of sec. 7491(a)            
          or (c) in the instant case.  Petitioners filed petitioners’ 1997            
          return on or about Aug. 15, 1998, and petitioners’ 1998 return on           
          or about July 16, 1999.  We presume that respondent's examination           
          of those returns began after July 22, 1998, and that sec. 7491(a)           
          and (c) is applicable in the instant case.  However, petitioners            
          do not argue that the burden of proof shifts to respondent under            
          sec. 7491(a).  Even if petitioners had advanced such an argument,           
          they have not established that they have complied with the                  
          applicable requirements of sec. 7491(a)(2).  Under the circum-              
          stances presented here, we conclude that the burden of proof does           
          not shift to respondent under sec. 7491(a).                                 





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