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related penalty under section 6662(a) because of (1) negligence
or disregard of rules or regulations or (2) a substantial under-
statement of income tax.
OPINION
Petitioners6 have the burden of showing error in respon-
dent’s determinations in the notice that remain at issue.7 See
Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933). With
respect to the deductions claimed by petitioners, deductions are
strictly a matter of legislative grace, and petitioners bear the
burden of proving that they are entitled to any deductions
claimed. See INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84
(1992).
6Although Mr. Stoddard did not appear at trial, Ms. Stoddard
informed the Court that Mr. Stoddard had authorized her to speak
for both of them at trial, and the Court allowed her to do so.
Ms. Stoddard filed briefs in this case; Mr. Stoddard did not.
However, our findings and conclusions herein shall apply to both
Ms. Stoddard and Mr. Stoddard.
7With respect to court proceedings arising in connection
with examinations commencing after July 22, 1998, under sec.
7491(a) the burden of proof shifts to respondent in specified
circumstances. Internal Revenue Service Restructuring and Reform
Act of 1998, Pub. L. 105-206, sec. 3001(c), 112 Stat. 727. The
record in this case does not establish the date on which the
examination of each of petitioners’ taxable years at issue began,
and neither party contends that sec. 7491(a) applies here.
With respect to court proceedings arising in connection with
examinations commencing after July 22, 1998, under sec. 7491(c)
respondent bears the burden of production with respect to any
individual’s liability for any penalty or addition to tax. Id.
As noted above, the record in this case does not establish the
date on which the examination of each of petitioners’ taxable
years at issue began. Moreover, neither party contends that sec.
7491(c) applies here.
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