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petitioner’s cost bases in those assets. In Waterman v.
Commissioner, T.C. Memo. 1990-497, the Commissioner had issued
separate notices of deficiency to a husband and a wife (both
nonfilers) making adjustments for, among other things, their
failures to report gains on their disposition of a jointly owned
inventory of paintings held primarily for sale to customers in
the ordinary course of the husband’s trade or business as an art
dealer. We found that their disposition amounted to a sale for
$250,000, but we concluded that the record lacked any credible
evidence of their joint basis in the paintings. The
Commissioner’s adjustment was predicated on his claim that their
joint gain was $250,000, because their joint basis was zero.
While denying that they realized any gain, the taxpayers asserted
that their joint basis was $100,000. We stated: “In the absence
of evidence upon which to make a finding of fact or a reasonable
estimate of petitioners’ basis, we must hold against the parties
bearing the burden of proof on that issue.” Inasmuch as the wife
bore the burden of proof in her case, we sustained the
Commissioner’s claims that the couple’s joint basis in the
paintings was zero and their joint gain was $250,000. We further
held that she had to include in gross income her share of that
gain. In the husband’s case, however, the Commissioner bore the
burden of proof because, in the amended answer, he had changed
the year in which he argued the disposition of the paintings had
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