-10-
evidence that those determinations are erroneous. Rule
142(a)(1); Welch v. Helvering, 290 U.S. 111, 115 (1933).
However, a taxpayer can shift the burden of proof to the
Commissioner under section 7491(a) if the taxpayer satisfies the
requirements of section 7491(a)(2).10
Because the record does not support a finding that In Touch
or its TMP maintained required records and substantiated the
items claimed on its 2000 return, we conclude that petitioner did
not satisfy the requirements of section 7491(a). Therefore, the
burden of proof remains with petitioner on all issues.
II. Accrual of Consulting Fees
Section 461(a) states that a deduction must be taken in the
proper taxable year under the taxpayer’s method of accounting.
Accrual method taxpayers generally become entitled to a deduction
when all the events have occurred to establish the fact of the
liability and the amount of such liability can be determined with
reasonable accuracy. Sec. 461(h)(4); sec. 1.461-1(a)(2), Income
Tax Regs. To be properly accruable under the “all events test”,
10 Under sec. 7491(a)(2), a taxpayer must prove: (1) The
taxpayer has complied with the Code’s substantiation
requirements; (2) the taxpayer has maintained all required
records; and (3) the taxpayer has cooperated with reasonable
requests by the Commissioner for witnesses, information,
documents, meetings, and interviews.
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Last modified: November 10, 2007