Earl G. Higbee and Lesley A. Higbee - Page 1

                                   116 T.C. No. 28                                    

                               UNITED STATES TAX COURT                                

                 EARL G. HIGBEE AND LESLEY A. HIGBEE, Petitioners v.                  
                    COMMISSIONER OF INTERNAL REVENUE, Respondent                      

               Docket No. 14035-99.                     Filed June 6, 2001.           

                    Ps filed a petition seeking redeterminations of                   
               R’s disallowance of several deductions and imposition                  
               of an addition to tax and accuracy-related penalty.                    
               The parties settled most of the issues regarding the                   
               disallowed deductions except one regarding certain                     
               Schedule C deductions.  At trial, Ps claimed additional                
               deductions on account of a casualty loss, charitable                   
               contributions, unreimbursed employee expenses, and                     
               Schedule C and E expenses that were neither claimed by                 
               Ps on their tax returns nor raised in the notice of                    
               deficiency.  The examination in the instant case took                  
               place after the effective date of sec. 7491, I.R.C., as                
               amended by the Internal Revenue Service Restructuring                  
               and Reform Act of 1998, Pub. L. 105-206, sec. 3001, 112                
               Stat. 685, 726.                                                        
                    Held:  Because Ps failed to introduce credible                    
               evidence, Ps failed to meet the requirements of sec.                   
               7491(a), I.R.C., as amended, so as to place the burden                 
               of proof on R for the factual issues relating to the                   

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