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respectively, were issued by Ventana, payable to “C.E. Shirley”.
Those checks were cashed, having been endorsed: “Curtis E.
Shirley”, with no qualification (e.g., “For the C E Shirley
Trust”).
Deposits totaling $33,980 were made to bank accounts of the
C. Shirleys during 1995.
OPINION
I. Section 7491
In pertinent part, Rule 142(a) provides: “The burden of
proof shall be upon the petitioner, except as otherwise provided
by statute * * * and except that, in respect of any new matter,
* * * it shall be upon respondent.” In certain circumstances,
if a petitioner introduces credible evidence with respect to any
factual issue relevant to ascertaining such petitioner’s
liability for tax, section 7491 places the burden of proof on
respondent. See sec. 7491(a)(1); Rule 142(a). Section 7491 is
effective with respect to examinations commenced after July 22,
1998. See Internal Revenue Service Restructuring and Reform Act
of 1998 (RRA 1998), Pub. L. 105-206, sec. 3001(c)(2), 112 Stat.
727. Respondent concedes that the examinations of the J. and C.
Shirleys commenced after July 22, 1998.
Section 7491(a)(2) establishes prerequisites (the
prerequisites) to establishing that the burden of proof may lie
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