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affg. in part, and remanding T.C. Memo. 1988-264; Gundotra v.
Commissioner, T.C. Memo. 1995-303, affd. 149 F.3d 1168 (4th Cir.
1998).
3. Conclusion
Petitioner invested in securities in 1996-98. The margin
interest she paid to Dain Rauscher is investment interest which
she may deduct under section 163(h)(2)(B) for 1996-98 to the
extent of her net investment income for those years. Sec.
163(d).
C. Whether Petitioner Is Liable for Additions to Tax for
1996-98
1. Failure To File Returns
A taxpayer is liable for an addition to tax of up to 25
percent for failure to file a Federal income tax return unless
the failure was due to reasonable cause and not willful neglect.
Sec. 6651(a)(1); United States v. Boyle, 469 U.S. 241, 245
(1985).
In court proceedings arising in connection with examinations
beginning after July 22, 1998, section 7491(c) places on the
Commissioner the burden of producing evidence showing that it is
appropriate to impose the addition to tax under section
6651(a)(1). Petitioner did not file returns for 1996-98. Thus,
respondent has shown that the section 6651(a)(1) addition to tax
applies, unless petitioner proves that her failure to file was
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