- 8 - Commissioner’s use of the bank deposits method is not arbitrary or capricious. Id. Bank deposits are prima facie evidence of income. Id. In calculating a taxpayer’s taxable income, the Commissioner must take into account any nontaxable source or deductible expense of which he has knowledge. Id. at 645-646. Generally the taxpayer bears the burden of proof. Rule 142(a)(1). The burden of proving facts relevant to the deficiency may shift to the Commissioner under section 7491 if the taxpayer establishes compliance with the requirements of section 7491(a)(2)(A) and (B) by substantiating items, maintaining required records, and fully cooperating with the Secretary’s reasonable requests. Section 7491 also places the burden of production upon the Secretary with respect to additions to tax. Sec. 7491(c). Section 7491 is effective with respect to court proceedings arising in connection with examinations by the Commissioner commencing after July 22, 1998, the date of its enactment by section 3001(a) of the Internal Revenue Service Restructuring and Reform Act of 1998, Pub. L. 105-206, 112 Stat. 685. It is not clear from the record when respondent commenced the examination of petitioner’s return; however, petitioner has not alleged that section 7491 is applicable to this case. Even if section 7491 were to apply, petitioner has not established that he complied with the requirements of section 7491(a)(2)(A)Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Next
Last modified: May 25, 2011