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Co. v. Commissioner, supra; Coleman v. Commissioner, supra. The
United States Court of Appeals for the Fourth Circuit to which an
appeal in this case would normally lie requires application of
the strong proof rule where a taxpayer attempts to disregard the
form of a transaction as not reflective of its substance. In an
unpublished opinion, Estate of Hoffman v. Commissioner, 8 Fed.
Appx. 262, 266 n.2 (4th Cir. 2001), that Court of Appeals ob-
served: “Taxpayers who seek to elevate substance over form must
present ‘strong proof,’ a burden which is greater than a prepon-
derance of the evidence.”
Applying the foregoing principles to the instant case,
petitioners must show by strong proof that the benefits and
burdens of ownership of lots 5 and 12 did not pass to Kevin
O’Malley and Edward O’Malley, respectively, in order to sustain
their position that the December 2, 1999 transaction and the June
14, 2000 transaction do not constitute sales for tax purposes.
Evaluation of Certain Evidence on Which Petitioners Rely
Petitioners rely on certain testimonial and documentary
evidence in order to satisfy their burden of proof. The testimo-
nial evidence on which petitioners rely is the testimony of Mr.
O’Malley and Edward O’Malley. We found both Mr. O’Malley and
Edward O’Malley to be credible. As discussed below, we also
found certain of Mr. O’Malley’s testimony regarding the December
2, 1999 transaction to be general, vague, conclusory, and/or
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