- 15 -
1994 and 1995 because they relied in good faith on the advice of
their accountant.14
The estate argues that all grain sales income is
attributable to Russell because he was entitled to receive all
the farm income as his distributive share of BBP income.15 In
its reply brief, the estate for the first time joins respondent’s
alternative argument that the grain was the sole property of
14On brief, Russell and Clarice argue that sec. 7491 applies
and that respondent has the burden of proof with respect to the
issues for decision. In certain circumstances, if the taxpayer
introduces credible evidence with respect to any factual issue
relevant to ascertaining the proper tax liability, sec. 7491
places the burden of proof on respondent. Sec. 7491(a); Rule
142(a)(2). Sec. 7491(c) operates to place the burden of
production on respondent in any court proceeding with respect to
the liability of the taxpayer for penalties and additions to tax.
Sec. 7491 is effective with respect to court proceedings arising
in connection with examinations commencing after July 22, 1998.
Internal Revenue Service Restructuring and Reform Act of 1998,
Pub. L. 105-206, sec. 3001(c), 112 Stat. 727. Russell and
Clarice have introduced no evidence to establish whether the
examination in this case commenced after July 22, 1998, and,
consequently, they have failed to show that sec. 7491 applies.
Eddie Cordes, Inc. v. Commissioner, T.C. Memo. 2001-265. We note
that the evidence that is in the record establishes that the
examination of the estate, as well as an examination of BBP,
began before July 23, 1998.
15We note that the estate, in arguing that Melvin’s and
Russell’s distributive shares were the profits from the
respective activity each conducted, has not discussed the fact
that this finding would mean that the estate should have reported
100 percent of the income from the oil and gas activity instead
of only 50 percent of the income. It appears that the estate is
arguing that it should be liable for only 50 percent of the
income from the oil and gas activity and no portion of the income
from the farming activity. This conflicts with the estate’s
primary argument that its distributive share was the profits from
the oil and gas activity.
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