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This burden, however, may shift to the Commissioner to
disprove entitlement to a claimed deduction if the taxpayer
introduces “credible evidence” complete with the necessary
substantiation and documentation sufficient to fulfill the
requirements of section 7491(a).5 To shift the burden, the
taxpayer must also have complied with requirements to cooperate
with reasonable requests by the Commissioner for witnesses,
information, documents, meetings, and interviews. Id. The
taxpayer bears the burden of proving that these requirements have
been met. Snyder v. Commissioner, T.C. Memo. 2001-255 (citing H.
Conf. Rept. 105-599, at 240-241 (1998), 1998-3 C.B. 747, 994-
995).
In the context of the passive loss rules under section 469,
a taxpayer’s participation in an activity may be established by
any reasonable means. Sec. 1.469-5T(f)(4), Temporary Income Tax
Regs., supra at 5727; see Shaw v. Commissioner, T.C. Memo. 2002-
35. Contemporaneous daily time reports are not required if the
extent of participation may be established by other reasonable
means. Sec. 1.469-5T(f)(4), Temporary Income Tax Regs., supra.
Reasonable means may include identifying services performed over
a period of time and the approximate number of hours spent
performing the services during that period based on appointment
books, calendars, or narrative summaries. Id. Although the
5Sec. 7491 applies to examinations commencing after July 22,
1998, and therefore applies here. See Internal Revenue
Restructuring and Reform Act of 1998, Pub. L. 105-206, sec. 3001,
112 Stat. 726.
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Last modified: May 25, 2011