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profit allegedly paid to Crocus by ECI from the trade
show receipts. Respondent contends that petitioner
must report all the trade show income, less trade show
expenses paid by Crocus and ECI, and is not entitled to
reduce net income for any profit split with Crocus.
Respondent further contends that petitioner has not
produced sufficient evidence that it and Crocus were
ever engaged in a joint venture or ever agreed that
there should be a split of the net profits from the
foreign trade shows.
On January 16, 2002, the Court deemed moot petitioner’s
motion for summary judgment because the parties had stipulated
that both ECI and the royalty agreement should be disregarded for
Federal income tax purposes.
Discussion
Petitioner has the burden of showing that the determinations
in the notice of deficiency are erroneous. Rule 142(a); Welch v.
Helvering, 290 U.S. 111, 115 (1933).12 That this case has been
submitted fully stipulated does not obviate petitioner’s burden
of proof. Rule 122(b). We are mindful of the teaching of Burnet
v. Houston, 283 U.S. 223, 228 (1931), that difficulties of proof
12Sec. 7491(a), in certain instances, places the burden of
proof on respondent with respect to examinations of returns
commencing after July 22, 1998. Both petitioner and respondent
agreed that “In 1998 Revenue Agent Lois Petzig of the
Connecticut-Rhode Island District was assigned to the audit of
Comtek’s 1994 and 1995 tax returns.” Since there is no evidence
in the record regarding the exact date in 1998 the examination of
petitioner’s returns commenced, and since petitioner has at no
time contended that the provisions of sec. 7491(a) are
applicable, the burden of proof remains on petitioner. See
Estate of Fung v. Commissioner, 117 T.C. 247, 253 (2001).
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