Nicholson v. Commissioner
United States Tax Court
65 T.C.M. 2478, T.C. Memo. 1993-183 (1993)
- Written by Daniel Clark, JD
Facts
The Internal Revenue Service (IRS) (defendant) issued a notice of deficiency to Charles and Linda Nicholson (plaintiffs). The notice stated that the Nicholsons did not report $387,000 in income and that this income was taxable because the Nicholsons did not establish that it was excludable under the Internal Revenue Code. The notice did not otherwise state a basis for the IRS’s determination. The Nicholsons challenged the petition in the United States Tax Court. At trial, the IRS advanced a theory that its determination was based on an analysis comparing the Nicholsons’ reported income with their expenditures. After the trial, the IRS filed a brief in which it abandoned that theory and instead claimed that the unreported income came from six enumerated sources. The Nicholsons argued that the IRS’s brief raised a new matter within the meaning of Rule 142(a) of the Tax Court Rules of Practice and Procedure, shifting the burden of proof to the IRS.
Rule of Law
Issue
Holding and Reasoning (Halpern, J.)
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