E.J. Harrison and Sons, Inc. - Page 14

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          Dividend History                                                            
               Petitioner has never paid a dividend.                                  

                                       OPINION                                        
          I.  Burden of Proof                                                         
               A.  Rule 142(a)                                                        
               In pertinent part, Rule 142(a)(1) provides the general rule            
          that “[t]he burden of proof shall be upon the petitioner”.  Rule            
          142(a)(2) references the applicability of section 7491, which               
          shifts the burden of proof to the Secretary under certain                   
          specified circumstances.                                                    
               B.  Section 7491                                                       
               Section 7491, enacted as part of the Internal Revenue                  
          Service Restructuring and Reform Act of 1998 (RRA 1998), Pub. L.            
          105-206, sec. 3001, 112 Stat. 727, is applicable to “court                  
          proceedings arising in connection with examinations commencing              
          after the date of the enactment of this Act.”  RRA 1998 sec.                
          3001(c).  RRA 1998 was enacted on July 22, 1998, well before                
          respondent’s issuance of the notice on February 2, 2001.  The               
          record fails to indicate, however, the commencement date of                 
          respondent’s examination of petitioner.  Moreover, petitioner has           
          neither argued that section 7491 is applicable to shift the                 
          burden of proof to respondent nor established compliance with the           
          requirements of section 7491(a)(2)(C) (the net worth limitation).           
          Petitioner has the burden to prove that it satisfies the                    





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