Frank Franklin - Page 3

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               Respondent determined a deficiency of $1,866 in petitioner's           
          Federal income tax for 1996 and an accuracy-related penalty under           
          section 6662(a) of $127.  At trial, respondent conceded an                  
          addition to tax under section 6651(a)(1).                                   
               Following concessions by petitioner,2 the issues remaining             
          for decision are:  (1) Whether petitioner is entitled to trade or           
          business expense deductions under section 162(a) in excess of               
          amounts allowed by respondent; (2) whether $1,193 of a $5,348               
          distribution received by petitioner from Metropolitan Life                  
          Insurance Co. during 1996 constituted gross income; and (3)                 
          whether petitioner is liable for the accuracy-related penalty               
          under section 6662(a).3                                                     

               2    At trial, petitioner conceded unreported income amounts           
          of $1,503 and $748, consisting, respectively, of a State income             
          tax refund and unemployment compensation benefits.                          
               3    The Internal Revenue Service Restructuring & Reform Act           
          of 1998, Pub. L. 105-206, sec. 3001, 112 Stat. 726, added sec.              
          7491, which, under certain circumstances, places the burden of              
          proof on the Secretary with respect to any factual issue relevant           
          to a taxpayer's liability for taxes in court proceedings arising            
          in connection with examinations commencing after July 22, 1998.             
          Respondent stated in the pretrial memorandum that the audit of              
          petitioner's joint income tax return for 1996 commenced with a              
          letter dated May 4, 1998, addressed to petitioner and his wife              
          scheduling an appointment with them with respect to the audit of            
          their 1996 return, an appointment that neither petitioner nor his           
          spouse honored.  Thereafter, however, petitioner's spouse met               
          with a representative for respondent and presented documentation            
          that respondent accepted as substantiation for the expenses                 
          described hereafter in the opinion.  The burden of proof,                   
          therefore, has not shifted to respondent under section 7491,                
          since the examination commenced prior to July 22, 1998, nor has             

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