Mazhar Tabrezi, f.k.a. Agha Hussain, and Sajida Razvi - Page 9

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          presentation of different evidence.’”  Id. at 191 (quoting Wayne            
          Bolt & Nut Co. v. Commissioner, 93 T.C. 500, 507 (1989)).                   
               Thus, we conclude that respondent has raised a new matter.             
          Respondent went beyond the scope of the original deficiency                 
          determination by arguing in his posttrial brief that the                    
          discharge of the Household Finance mortgage gave rise to COD                
          income.  The deficiency determined in the notice of deficiency              
          was based on COD income from the discharge of three other                   
          mortgages.  Different evidence is required to show that the                 
          Household Finance mortgage generated COD income, because the date           
          of its cancellation, and thus the date for determining                      
          petitioners’ solvency for purposes of section 108(a)(1)(B) and              
          (d)(3), differs from the date on which any of the other three               
          mortgages was canceled.  Therefore, respondent bears the burden             
          of proof and must show, by a preponderance of the evidence, that            
          petitioners were solvent under section 108(a)(1)(B) as of the               
          calculation date.  For the reasons discussed below, we conclude             
          that respondent has failed to meet his burden of proof.                     
          C.   Respondent’s Failure To Meet His Burden of Proof                       
               In order to establish petitioners’ solvency as of the                  
          calculation date, respondent must prove by a preponderance of the           
          evidence that the fair market value of petitioners’ assets then             
          exceeded their liabilities.  See Merkel v. Commissioner, 109 T.C.           
          483, 484 (1997).  To exclude from that calculation any portion of           

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