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determined by the Court, the burden of proof is on the taxpayer.
Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933).10 The
burden of proof is on the Commissioner, however, in respect of any
new matter not raised in the notice of deficiency, increases in
deficiency, and affirmative defenses raised by the Commissioner in
an answer. Rule 142(a).
A notice of deficiency must “describe the basis” for the tax
deficiency. Sec. 7522. In some situations, failure to describe
the basis for the tax deficiency in the notice of deficiency
results in a new matter being raised under Rule 142(a). Shea v.
Commissioner, 112 T.C. 183, 197 (1999); Wayne Bolt & Nut Co. v.
Commissioner, 93 T.C. 500, 507 (1989); Estate of Ballantyne v.
Commissioner, T.C. Memo. 2002-160. A new matter is raised when the
basis or theory on which the Commissioner relies is not stated or
described in the notice of deficiency and the new theory or basis
requires the presentation of different evidence. Wayne Bolt & Nut
Co. v. Commissioner, supra at 507. In such situation, the burden
of proof is placed on the Commissioner with respect to that issue.
Id.
10 In certain circumstances, if the taxpayer introduces
credible evidence with respect to any factual issue relevant to
ascertaining the proper tax liability, sec. 7491 places the burden
of proof on the Commissioner. Sec. 7491(a); Rule 142(a)(2).
Decedent’s estate does not contend that sec. 7491 applies in this
case.
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