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OPINION
1. Burden of Proof
Taxpayers generally must prove the Commissioner’s
determinations wrong in order to prevail. Rule 142(a)(1);1 Welch
v. Helvering, 290 U.S. 111, 115 (1933). As one exception to this
rule, section 7491(a) places upon the Commissioner the burden of
proof with respect to any factual issue if the taxpayer
maintained adequate records, satisfied applicable substantiation
requirements, cooperated with the Commissioner, and introduced
during the court proceeding credible evidence on the factual
issue. The legislative history of section 7491(a) clarifies that
taxpayers must prove that they have satisfied the adequate
records, substantiation, and cooperation requirements before that
section places the burden of proof upon the Commissioner. H.
Conf. Rept. 105-599, at 239 (1998), 1998-3 C.B. 747, 994 (“The
taxpayer has the burden of proving that it meets each of these
conditions, because they are necessary prerequisites to
establishing that the burden of proof is on the Secretary.”); see
also Prince v. Commissioner, T.C. Memo. 2003-247.
We do not find that petitioner maintained adequate records,
satisfied applicable substantiation requirements, or cooperated
1 Rule references are to the Tax Court Rules of Practice and
Procedure. Section references are to the applicable versions of
the Internal Revenue Code.
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Last modified: May 25, 2011