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examination in the instant case commenced after July 22, 1998;
accordingly, we consider whether respondent bears the burden of
proof under section 7491(a).
Section 7491(a)(1) provides that if, in any court
proceeding, the taxpayer introduces credible evidence with
respect to factual issues relevant to ascertaining the taxpayer’s
liability for a tax, the Commissioner will have the burden of
proof with respect to such factual issues. The taxpayer must
also comply with substantiation and record-keeping requirements
and must cooperate with reasonable requests by the Commissioner
for “witnesses, information, documents, meetings, and
interviews”. See sec. 7491(a)(2)(A) and (B).
The statute does not expressly provide what constitutes
credible evidence. The conference committee’s report states:
Credible evidence is the quality of evidence which,
after critical analysis, the court would find
sufficient upon which to base a decision on the issue
if no contrary evidence were submitted (without regard
to the judicial presumption of IRS correctness). A
taxpayer has not produced credible evidence for these
purposes if the taxpayer merely makes implausible
factual assertions, frivolous claims, or tax
protestor-type arguments. The introduction of evidence
will not meet this standard if the court is not
convinced that it is worthy of belief. If after
evidence from both sides, the court believes that the
evidence is equally balanced, the court shall find that
the Secretary has not sustained his burden of proof.
[H. Conf. Rept. 105-599, at 240-241 (1998), 1998-3 C.B.
747, 994-995.]
See also Higbee v. Commissioner, 116 T.C. 438, 447 (2001).
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