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Discussion
A taxpayer generally bears the burden of proving that the
Commissioner’s determination is incorrect. Rule 142(a); Welch v.
Helvering, 290 U.S. 111 (1933). If the requirements of section
7491(a)(1) are met however, the burden of proof with respect to
factual issues relevant to ascertaining the tax liability of the
taxpayer shifts to the Commissioner. The Court finds that the
burden of proof does not shift to respondent because petitioner
has failed to comply with the requirements of section 7491(a).
Gross income includes all income from whatever source
derived, unless specifically excluded from income under the
exclusion provisions of the Internal Revenue Code. Sec. 61;
Dickman v. Commissioner, 465 U.S. 330, 334 (1984). Section 61
specifically lists "interest" as a source of gross income. Sec.
61(a)(4); sec. 1.61-4, Income Tax Regs.
Petitioner argues that she is not required to include the
interest she received from the redemption of the bonds in her
total gross income because she used the funds for higher
education expenses.
Section 135(a) provides that, in the case of an individual
who pays qualified higher education expenses during the taxable
year, no amount shall be includable in gross income by reason of
the redemption during such year of any qualified U.S. savings
bond. The term "qualified higher education expenses" includes
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Last modified: May 25, 2011