- 13 - if it is shown that there was reasonable cause for such portion and that the taxpayer acted in good faith with respect to such portion. The decision as to whether the taxpayer acted with reasonable cause and in good faith depends upon all the pertinent facts and circumstances. Sec. 1.6664-4(b)(1), Income Tax Regs. Section 7491(c) provides that the Commissioner shall bear the burden of production with respect to the liability of any individual for penalties. “The Commissioner’s burden of production under section 7491(c) is to produce evidence that it is appropriate to impose the relevant penalty”.5 Swain v. Commissioner, 118 T.C. ___, ___ (2002) (slip op. at 9); see also Higbee v. Commissioner, supra at 446. If a taxpayer files a petition alleging some error in the determination of the penalty, the taxpayer’s challenge generally will succeed unless the Commissioner produces evidence that the penalty is appropriate. Swain v. Commissioner, supra at ___ (slip op. at 12). The Commissioner, however, does not have the obligation to introduce evidence regarding reasonable cause or substantial authority. Higbee v. Commissioner, supra at 446-447. The Wards are deemed to have admitted certain facts-- including the fact that the Wards, and not the trusts, are the correct taxpayers to report the income and expenses of the 5 We do not decide herein whether respondent would have met his burden of production if he had not produced any evidence when the taxpayer failed to appear for trial.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Next
Last modified: May 25, 2011