- 7 -
personally guaranteed and which were secured by the partnerships’
real properties against which the property taxes were assessed.
Under Rule 142(a), the burden of proof is upon petitioners,
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 with respect to such issue. 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. See Internal Revenue Service Restructuring & Reform Act of
1998, Pub. L. 105-206, sec. 3001(c)(2), 112 Stat. 726. The
examination in the instant case began after July 22, 1998.
Petitioners contend that the burden of proof is therefore on
respondent. Respondent disagrees, contending that petitioners
have failed to introduce credible evidence, as required by
section 7491(a), regarding “the core factual issue” as to whether
petitioners were engaged in a trade or business “distinct from
their investment in S corporations or the activities conducted by
those S corporations, to which the payment of the taxes at issue
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 Next
Last modified: May 25, 2011