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In the notice of deficiency, respondent disallowed
petitioner's claimed dependency exemption, disallowed the earned
income credit, and determined that petitioner's filing status was
single rather than head-of-household. Although respondent became
aware of petitioner's unreported cash income from petitioner's
admission at trial, respondent did not move to assert an
increased deficiency attributable to the unreported cash income
payments.
The Court first addresses petitioner's entitlement to the
claimed dependency exemption deduction for La Toya Johnson.2 The
Court assumes that La Toya Johnson was petitioner's child,
although the evidence for such a conclusion is not entirely
convincing.
Section 151(c) allows taxpayers to deduct an annual
exemption amount for each dependent as defined in section 152.
Under section 152(a), the term "dependent" means certain
2
At trial, respondent agreed that sec. 7491 is applicable in
this case because the audit of petitioner's Federal income tax
return commenced after July 22, 1998. Sec. 7491, in certain
instances, shifts the burden of proof from petitioner to
respondent. Rule 142(a). The Court concludes the burden of
proof did not shift to respondent because petitioner failed to
satisfy the conditions of sec. 7491. Specifically, petitioner
maintained no records to substantiate the claimed dependency
exemption and ignored all requests by respondent prior to trial
for such information. Petitioner's first meeting with counsel
for respondent was a belated appearance after the Court had
completed the call of the calendar at the commencement of the
trial session. Sec. 7491(a)(2).
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