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date of the cancellation of debt and $21,975 as the amount of
debt canceled.
In or about January 1996, Advanta mailed the Form 1099-C to
Ms. Yeager at her last known address. The address listed on Ms.
Yeager’s Form 1099-C was the California address. At the time
Advanta mailed the Form 1099-C, Ms. Yeager lived in Texas. Ms.
Yeager did not receive the Form 1099-C and was unaware of the
Form 1099-C until she was contacted by the IRS during the audit
of her 1994, 1995, and 1996 tax years.
In February 1996, Ms. Yeager filed for bankruptcy.
OPINION
I. Cancellation of Indebtedness
A. Burden of Proof
Generally, the taxpayers bear the burden of proof.6 Rule
142(a)(1). As a preliminary matter, petitioners argue that the
burden of proof is on respondent to establish that petitioners
had COD income because respondent issued notices of deficiency
based solely upon a Form 1099 issued by Advanta. Petitioners
argue that Portillo v. Commissioner, 932 F.2d 1128 (5th Cir.
1991), revg. T.C. Memo. 1990-68, and 988 F.2d 27 (5th Cir. 1993),
revg. T.C. Memo. 1992-99, places the burden on respondent.
Petitioners make this argument for the first time on brief.
6 Sec. 7491 is not applicable to these cases. Rinehart v.
Commissioner, T.C. Memo. 2002-9, n.20.
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