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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
(continued...)
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