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Company. During 1993, Toro Leasing was a partnership in which
Mr. LeBouef and Edward Silveri were each 50 percent general
partners who shared equally in profits and losses. Toro Leasing
filed a Form 1065, U.S. Partnership Return of Income, reflecting
a Form 4797 loss of $39,582 on sales or exchanges of business
property. Attached is a Schedule K-1, Partner’s Share of Income,
Credits, Deductions, etc., showing $19,791 as Mr. LeBouef’s
portion of this loss.
At some time prior to or during April of 1998, respondent
commenced an examination of petitioners’ 1993 return. Revenue
Agent Ellen Nierich conducted this examination, which culminated
in the issuance of a notice of deficiency to petitioners on July
6, 1999. The adjustments made in this notice are the subject of
the present litigation.
II. Burden of Proof
We begin with a threshold observation regarding burden of
proof. As a general rule, the Commissioner’s determinations are
presumed correct, and the taxpayer bears the burden of proving
otherwise. Rule 142(a). Recently enacted section 7491, however,
may operate in specified circumstances to place the burden on the
Commissioner. Because petitioners make certain statements on
brief that can be interpreted as an appeal to the benefits of
section 7491, we emphasize that the statute is applicable only to
court proceedings that arise in connection with examinations
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