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Source of Income 1985 1986 1987
Accounting fees $225,743 $400,635 $497,289
Check cashing fees 60,234 39,217 79,018
Interest from loans 201,565 217,868 341,324
Interest from Treasury
notes 66,222 20,193
Interest from banks 46,751 86,341 90,694
Capital gains 22,826
Totals $600,515 $787,080 $1,008,325
OPINION
A. Burden of Proof
Petitioner contends that respondent bears the burden of
proof under section 7491, and that respondent’s determination is
arbitrary or invalid, and thus is not presumed to be correct. We
disagree.
1. Whether Section 7491 Applies
Under section 7491, the burden of proof is placed on the
Secretary if several requirements are met. Sec. 7491(a)(1)
and (2). Section 7491 applies to court proceedings arising in
connection with examinations beginning after July 22, 1998.
Internal Revenue Service Restructuring & Reform Act of 1998, Pub.
L. 105-206, sec. 3001(c), 112 Stat. 727. Petitioner contends
that the examination began after July 22, 1998, and he points out
that he was incarcerated on that date.
The notice of deficiency, issued in 1993, states that “from
records and information available, it has been determined that
you received additional income in the amount shown from the
sources indicated”. It also states that the amounts determined
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