- 4 -
in excess of $207,295 and $133,264 for 1989 and 1990,
respectively,3 and, more specifically, whether petitioner is
entitled to deductions for parking expenses of $1,443 and $1,492
and business bad debts of $14,000 and $8,000 for 1989 and 1990,
respectively, and (4) whether petitioner is liable for the
accuracy-related penalty under section 6662(a) for each of the
audit years.4 A fifth issue, raised by petitioner for the first
time in his opening brief, is whether the notice of deficiency,
as it pertains to the constructive dividend and liquidating
dividend issues, is “arbitrary and excessive”, thereby shifting
to respondent the burden of proof as to the existence and amount
of any deficiency for the audit years. In the absence of such a
finding, petitioner bears the burden of proof. See Rule 142(a).5
3 In the notice, respondent determined that petitioner’s
allowable Schedule C expenses for 1989 and 1990, respectively,
were $163,461 and $111,294. The additional allowances resulted
from respondent’s examination of checks written by petitioner
during 1989 and 1990.
4 Petitioner concedes that he is liable for additions to
tax under sec. 6651(a)(1) in amounts to be determined for 1989
and 1990, and respondent concedes that petitioner is not liable
for the civil fraud penalty under sec. 6663 for such years.
5 Under certain circumstances, sec. 7491(a)(1) shifts the
burden of proof to respondent. Sec. 7491 applies to court
proceedings arising in connection with examinations commencing
after July 22, 1998, the date of enactment of the Internal
Revenue Service Restructuring and Reform Act of 1998 (RRA 1998),
Pub. L. 105-206, 112 Stat. 685. See RRA 1998 sec. 3001(c), 112
Stat 727. Respondent alleges that the examination in this case
(continued...)
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