- 68 - 3. Conclusion The Derbys understated Dr. Derby's 1994 income from the corporation to the extent of $3,665. III. Penalties A. Introduction The notices of deficiency issued to petitioners contain the following explanation for respondent's denial of a charitable contribution deduction for each petitioner's alleged contribution of practice intangibles to SMF: The contribution claimed with respect to * * * [SMF] is not allowable because it has not been established that the fair market value of the assets sold exceeded the sales price received by you or that the intangible assets donated had any fair market value. Based upon petitioners' alleged failure to establish that their intangible assets had any fair market value, respondent alleges, in his answers to the petitions, that "petitioners are liable for the accuracy related penalty under [section] 6662(a) in the amount of 40 [percent] of the deficiency for a gross valuation misstatement under * * * [section] 6662(h), or in the alternative are liable for a penalty in the amount 20 [percent] of the deficiency for a substantial valuation misstatement under * * * section 6662(e)" (sometimes, the overvaluation penalty). Because respondent raises the penalty issue in his answers, the issue constitutes a "new matter" under Rule 142(a), and the burden of proof with respect to that issue is upon respondent. See RulePage: Previous 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 NextLast modified: March 27, 2008