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Under Rule 142, the burden of proof is upon the petitioner,
except as otherwise provided by statute. In certain
circumstances, if the taxpayer introduces credible evidence with
respect to any factual issue relevant to ascertaining the proper
tax liability, section 7491 places the burden of proof on
respondent. Sec. 7491(a); Rule 142(a)(2). Section 7491 is
effective with respect to court proceedings arising in connection
with examinations commencing after July 22, 1998. RRA 1998 sec.
3001(c)(2), 112 Stat. 726.
The undisputed facts indicate that respondent’s examination
of petitioners’ 1995 Federal income tax return commenced before
July 23, 1998. Accordingly, section 7491 has no application to
this case. Petitioners bear the burden of proof. Rule 142(a).
Petitioners’ Trade or Business Expenses
The parties disagree about petitioners’ entitlement to
deduct, pursuant to section 162, various trade or business
expenses.
Vehicle Expenses
On their 1995 return, petitioners claimed no deduction for
vehicle expenses. In the notice of deficiency, respondent
allowed petitioners a deduction of $467. Petitioners have not
established that they are entitled to a vehicle expense deduction
greater than respondent has allowed.
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