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Some of the facts have been stipulated and are so found.
The stipulations of fact and those attached exhibits which were
admitted into evidence are incorporated herein by this reference.
Petitioners resided in Raleigh, North Carolina, on the date the
petition was filed in this case.
Generally, a taxpayer bears the burden of proving the
Commissioner’s determinations in a statutory notice of deficiency
to be in error. Rule 142(a). Although section 7491(a) shifts
the burden of proof to the Commissioner with respect to certain
factual issues, the burden remains on the taxpayer with respect
to an issue where the taxpayer (1) fails to introduce credible
evidence with respect thereto, or (2) fails to comply with
statutory recordkeeping and substantiation requirements.
A taxpayer must keep records sufficient to establish the
amounts of the items reported on his Federal income tax return.
Sec. 6001; sec. 1.6001-1(a), (e), Income Tax Regs. In the event
that a taxpayer establishes that a deductible expense has been
paid but is unable to substantiate the precise amount, we
generally may estimate the amount of the deductible expense
bearing heavily against the taxpayer whose inexactitude in
1(...continued)
assessment of taxes and interest which apparently had been made
by respondent under the authority of sec. 6213(b)(1). The amount
of this assessment (exclusive of the interest portion) is
properly reflected in the notice of deficiency in such a manner
as to reduce the amount of the 1997 deficiency.
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Last modified: May 25, 2011