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thereunder the burden of proof is on respondent as to the
treatment of the $4,950 denominated as interest.
Respondent argues that the letter to petitioner dated
July 2, 1998, was mailed on that date, that the letter
effectively commenced on that date the examination of
petitioner’s 1996 Federal income tax, 20 days prior to the
effective date of section 7491, and therefore that for 1996 the
burden of proof is on petitioner.
Neither the Code nor the regulations define when an
examination will be regarded as having commenced for purposes of
section 7491. Respondent points us to the legislative history of
section 7491 and to Rev. Proc. 97-27, 1997-1 C.B. 680. The
legislative history explains the following with regard to what
constitutes an examination for purposes of section 7491:
An audit is not the only event that would be
considered an examination for purposes of
this provision. For example, the matching of
an information return against amounts
reported on a tax return is intended to be an
examination for purposes of this provision.
Similarly, the review of a claim for refund
prior to issuing that refund is also intended
to be an examination for purposes of this
provision. [H. Conf. Rept. 105-599, supra
at 242, 1998-3 C.B. at 996.]
In Rev. Proc. 97-27, 1997-1 C.B. at 683, for purposes of a
change in accounting method under section 481, respondent takes
the position that any contact by respondent to schedule an
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