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Petitioners claim a casualty loss deduction in the amount of
$1,328 on account of alleged damage to their home and personal
property which was not deducted on their tax return. Mr. Higbee
testified that the $1,328 represents the damage to petitioners’
property which was not reimbursed by their insurance company but
awarded by a small claims court.3 In support, petitioners
provided a form document entitled “Small Claims
Complaint/Summons/Answer” which appears to be issued by the
Glendale Justice Court in Glendale, Arizona, but which does not
bear any type of notation or certification by a governmental
official.
In order for section 7491(a) to place the burden of proof on
respondent, the taxpayer must first provide credible evidence.
The statute itself does not state what constitutes credible
evidence. The conference committee’s report states as follows:
Credible evidence is the quality of evidence which,
after critical analysis, the court would find
sufficient upon which to base a decision on the issue
if no contrary evidence were submitted (without regard
to the judicial presumption of IRS correctness). A
taxpayer has not produced credible evidence for these
purposes if the taxpayer merely makes implausible
factual assertions, frivolous claims, or tax protestor-
type arguments. The introduction of evidence will not
meet this standard if the court is not convinced that
it is worthy of belief. If after evidence from both
sides, the court believes that the evidence is equally
balanced, the court shall find that the Secretary has
not sustained his burden of proof. [H. Conf. Rept.
105-599, at 240-241 (1998), 1998-3 C.B. 747, 994-995.]
3 Petitioners assert that the judgment remains unpaid.
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Last modified: May 25, 2011