-7-
Burden of Proof
"The burden of proof remains on the Taxpayer to show that the
Commissioner's determination was wrong." Leonard Pipeline
Contractors, Ltd. v. Commissioner, 142 F.3d at 1136. "This burden
is a burden of persuasion; it requires * * * [petitioner] to show
the merits of [its] claim by at least a preponderance of the
evidence." Rockwell v. Commissioner, 512 F.2d 882, 885 (9th Cir.
1975), affg. T.C. Memo. 1972-133. Where the Commissioner has made
a deficiency determination denying the taxpayer's entitlement to a
claimed deduction (such as here), "the taxpayer has 'the burden of
producing enough evidence to rebut the deficiency determination and
the burden of persuasion in substantiating a claimed deduction'."
Goldberg v. United States, 789 F.2d 1341, 1343 (9th Cir. 1986)
(quoting Valley Title Co. v. Commissioner, 559 F.2d 1139, 1141 (9th
Cir. 1977), revg. and remanding T.C. Memo. 1975-48).
In the instant case, petitioner produced sufficient evidence
to overcome the presumption of correctness of respondent's
determination. We were convinced that petitioner was entitled to
a greater compensation deduction than that allowed by respondent.
Ample evidence demonstrated the magnitude of Mr. Leonard's
contributions to petitioner: (1) Mr. Leonard was directly
responsible for petitioner's growth and success--providing
invaluable services to the company by obtaining contracts and
generating business for petitioner; (2) over its 10 years of
existence, petitioner had total gross revenues of $123,124,905 and
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