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OPINION
I. Burden of Proof: Rule 142(a); Sections 7522 and 7491
As a general rule, the Commissioner’s determinations in a
notice of deficiency are presumed correct, and the burden is on the
taxpayer to prove otherwise. Rule 142(a); Welch v. Helvering, 290
U.S. 111, 115 (1933). However, this rule does not apply for new
matters raised by the Commissioner after the issuance of the notice
of deficiency. Rule 142(a). In addition, under certain
circumstances, the burden of proof or production is on the
Commissioner. See secs. 7522, 7491.4
A. Section 7522
Section 7522 requires a notice of deficiency to “describe the
basis” for the tax deficiency. In some situations, this Court has
held that failure to describe the basis for the tax deficiency in
the notice of deficiency is analogous to the raising of a new
matter 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.
In this regard, we stated that a new matter is raised when the
basis or theory upon which the Commissioner relies is not stated or
4 Sec. 7491 applies to court proceedings arising in
connection with examinations beginning after July 22, 1998.
Internal Revenue Service Restructuring and Reform Act of 1998, Pub.
L. 105-206, sec. 3001(a), 112 Stat. 726. In this case, the
examination of petitioners’ returns began after July 22, 1998.
Accordingly, sec. 7491 is applicable to this case.
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