31
reporting its deposits in income under section 1.451-5, Income
Tax Regs. Respondent concedes that shifting the burden of proof
may be proper where the notice of deficiency violates section
7522, but contends that there was no violation here.
We need not decide whether to shift the burden of proof to
respondent under section 7522 because respondent prevails on the
deposits issue regardless of which party bears the burden of
proof.
E. Modification of the 30-Day Letter by the Revenue Agent
Respondent's revenue agent added to the 30-day letter a
column with figures comparing Eagle's return with the results of
the audit for 1992. Respondent's counsel did not know that the
revenue agent had changed it and gave it to the Court to include
in the stipulation. The revenue agent initially testified that
she had not made the change, but later testified that she had.
The parties agree that the Court should sanction respondent
under these circumstances, but disagree about whether the
appropriate sanction is to strike respondent's answer, as
petitioner contends; to shift the burden of proof for tax year
1992, as respondent contends; or some other sanction.10
10 Respondent's revenue agent testified that she mailed the
30-day letter to petitioner's "power of attorney". In view of
the fact that the revenue agent testified incorrectly about
whether she changed the report, had no records that she mailed
it, and did not know to whom she sent it, and petitioner's
counsel stated that he did not see it before 1996, we do not find
her testimony on this point to be credible. Thus, we have found
(continued...)
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