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the parties’ joint stipulations of fact. Petitioners rely on
these same exhibits in seeking an increased refund. Petitioners
cannot expect to use this evidence to seek an increased refund
and at the same time shield themselves from an increased
deficiency or addition to tax based on the same evidence.
Additionally, respondent informed petitioners at various times
before trial, including in respondent’s pretrial memorandum, that
respondent intended to raise the issues asserted in the amendment
to answer. Petitioner’s testimony also demonstrated his
knowledge of respondent’s intention.
Accordingly, we shall grant respondent’s and petitioners’
motions to conform pleadings to the evidence.
II. Items of Income
Generally, taxpayers bear the burden of proving that the
Commissioner’s determinations are incorrect. Rule 142(a); Welch
v. Helvering, 290 U.S. 111, 115 (1933). However, the
Commissioner bears the burden of proof with respect to any new
matter or increases in deficiency. Rule 142(a). Once the
Commissioner produces evidence sufficient to establish a prima
facie case, the burden shifts to the taxpayers of coming forward
with evidence sufficient to rebut the Commissioner’s proof. See
King v. Commissioner, T.C. Memo. 1995-524; Cally v. Commissioner,
T.C. Memo. 1983-203 (citing Papineau v. Commissioner, 28 T.C. 54
(1957)).
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