Earl G. Higbee and Lesley A. Higbee - Page 8




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               Petitioners claim a casualty loss deduction in the amount of           
          $1,328 on account of alleged damage to their home and personal              
          property which was not deducted on their tax return.  Mr. Higbee            
          testified that the $1,328 represents the damage to petitioners’             
          property which was not reimbursed by their insurance company but            
          awarded by a small claims court.3  In support, petitioners                  
          provided a form document entitled “Small Claims                             
          Complaint/Summons/Answer” which appears to be issued by the                 
          Glendale Justice Court in Glendale, Arizona, but which does not             
          bear any type of notation or certification by a governmental                
          official.                                                                   
               In order for section 7491(a) to place the burden of proof on           
          respondent, the taxpayer must first provide credible evidence.              
          The statute itself does not state what constitutes credible                 
          evidence.  The conference committee’s report states as follows:             
               Credible evidence is the quality of evidence which,                    
               after critical analysis, the court would find                          
               sufficient upon which to base a decision on the issue                  
               if no contrary evidence were submitted (without regard                 
               to the judicial presumption of IRS correctness).  A                    
               taxpayer has not produced credible evidence for these                  
               purposes if the taxpayer merely makes implausible                      
               factual assertions, frivolous claims, or tax protestor-                
               type arguments.  The introduction of evidence will not                 
               meet this standard if the court is not convinced that                  
               it is worthy of belief.  If after evidence from both                   
               sides, the court believes that the evidence is equally                 
               balanced, the court shall find that the Secretary has                  
               not sustained his burden of proof.  [H. Conf. Rept.                    
               105-599, at 240-241 (1998), 1998-3 C.B. 747, 994-995.]                 

               3  Petitioners assert that the judgment remains unpaid.                





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