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“adjusted base amount” of $34,000 must include in his gross
income 85 percent of his Social Security benefits. Sec.
86(a)(2), (c)(2).
In this case, in light of our earlier conclusion that
petitioner was required to include the full amount of the
$168,355.71 pension distribution in his 2002 income,
petitioner’s 2002 modified adjusted gross income greatly exceeded
$34,000, the statutory “adjusted base amount.” As a consequence,
85 percent of the $9,552 in Social Security benefits that
petitioner received in 2002, or $8,119.20, was taxable income to
petitioner in 2002. Sec. 86(a)(2)(B).
IV. Additions to Tax
A. Respondent’s Burden of Production
Under section 7491(c), respondent bears the burden of
production with respect to a taxpayer’s liability for penalties
or additions to tax. This means that respondent must “come
forward with sufficient evidence indicating that it is
appropriate to impose the relevant penalty.” Higbee v.
Commissioner, 116 T.C. 438, 446 (2001). In instances where an
exception to the penalty or addition to tax is afforded upon a
showing of reasonable cause, the taxpayer bears the burden of
demonstrating such cause. Id. at 446-447.
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