Charles A. and Marian L. Derby, et al. - Page 68




                                        - 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 Rule              







Page:  Previous  58  59  60  61  62  63  64  65  66  67  68  69  70  71  72  Next 

Last modified: March 27, 2008