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B. Additions to Tax
Pursuant to section 7491(c), the Commissioner has the burden
of production as to whether a taxpayer is liable for an addition
to tax. To meet this burden, he must produce sufficient evidence
showing that imposition of the addition to tax is appropriate in
the particular case. Higbee v. Commissioner, 116 T.C. 438, 446
(2001).
Once respondent meets this burden, petitioner must come
forward with persuasive evidence that respondent’s determination
is incorrect. See Rule 142(a); Higbee v. Commissioner, supra at
447. As a defense to the additions to tax, petitioner bears the
burden of proof regarding reasonable cause and lack of willful
neglect or the applicability of an exception. Secs. 6651(a),
6654(e).
II. Business Expense Deductions
As a general rule, section 162(a) authorizes deductions for
“all the ordinary and necessary expenses paid or incurred during
the taxable year in carrying on any trade or business”.
Taxpayers are required to maintain records sufficient to
substantiate each claimed deduction. Sec. 6001; Hradesky v.
4(...continued)
information returns per sec. 6201(d), respondent introduced in
evidence canceled checks substantiating most of the payments.
Moreover, the parties stipulated the nonemployee compensation
income.
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Last modified: November 10, 2007