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The deficiencies also included self-employment taxes for 1999,
2000, and 2001, as respondent determined these commissions
constituted self-employment income. Additionally, respondent
determined an accuracy-related penalty under section 6662(a) in
the amount of $863 only for 2001.
The first issue is whether petitioner earned income from
American Life during 1999, 2000, and 2001 under section 61(a)
based on commissions that he was entitled to after he no longer
worked for American Life that were not paid directly to him but
were diverted or applied to his debit accounts to offset the
balances he owed.
The determinations of the Commissioner in a notice of
deficiency are presumed correct, and the burden is on the
taxpayer to prove that the determinations are in error.
Rule 142(a); Welch v. Helvering, 290 U.S. 111 (1933).8
8Sec. 7491 shifts the burden of proof to the Commissioner if
the taxpayer introduces credible evidence with respect to any
factual issue relevant to ascertaining a tax liability provided
the taxpayer has maintained books and records and has cooperated
with reasonable requests by the Commissioner for witnesses,
information, documents, meetings, and interviews. The burden of
proof does not shift in this case principally because petitioners
did not maintain accurate books and records of the commissions
earned by petitioner with American Life. Had petitioners
maintained accurate books and records, there likely would have
been no need for these proceedings. The questions raised by
petitioner are attributable solely to his failure to maintain
books and records. Sec. 7491(c), however, places upon the
Commissioner the burden of production with respect to any penalty
or addition to tax.
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