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distribution. Petitioner bears the burden of proof.7 Rule
142(a)(1); Welch v. Helvering, 290 U.S. 111, 115 (1933).
A. Sufficiency of BCE’s Earnings and Profits
Petitioner contends that BCE had insufficient earnings and
profits to make a dividend and that, as a result, the
distribution of Nortel stock constituted a return of capital.
According to petitioner, BCE’s retained earnings statement is
incorrect. The retained earnings statement describes the total
value of the Nortel shares distributed to BCE’s shareholders as
equal to approximately $10 billion. Petitioner asserts, however,
that the total value of the Nortel stock distribution was
actually approximately $59 billion, which amount exceeded BCE’s
earnings and profits.
We cannot accept petitioner’s argument. Not only has
petitioner failed to offer any credible evidence in support of
his contention, the retained earnings statement clearly reflects
that BCE made the Nortel stock distribution from BCE’s earnings
and profits.
B. Reduction of the Distribution Amount
As his second argument, petitioner contends that, on the
effective date of the Nortel stock distribution, BCE’s8 stock
7Petitioner has not argued that respondent bears the burden
of proof, nor has petitioner satisfied the requirements of sec.
7491(a)(1).
8Petitioner’s argument specifically mentioned BCE’s stock.
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