Gavin Polone - Page 35

                                       - 35 -                                         
          payment were includable in petitioner’s taxable income for 1996,            
          1997, and 1998, respectively.17  Respondent also determined a               
          penalty pursuant to section 6662 for all 3 years.                           
          Refund Litigation                                                           
               On February 14, 2002, petitioner filed a complaint in U.S.             
          District Court seeking a refund of the Federal income taxes                 
          attributable to his including the November 1996 payment in income           
          on his 1996 return.                                                         
                                       OPINION                                        
          I.   Burden of Proof                                                        
               The parties vigorously dispute who bears the burden of                 
          proof.  Section 7491(a) places the burden of proof on the                   
          Commissioner with regard to certain factual issues if certain               
          conditions are met.  Higbee v. Commissioner, 116 T.C. 438, 440              
          (2001).  Section 7491 applies to examinations commenced after               
          July 22, 1998.  Id.  Respondent concedes that the examination of            
          petitioner’s 1996, 1997, and 1998 tax years began after the                 
          effective date of section 7491.                                             
               Section 7491(a)(2) provides that the Commissioner will bear            
          the burden of proof with respect to an issue pursuant to section            
          7491(a) if:                                                                 
                    (A) the taxpayer has complied with the                            
               requirements under this title to substantiate any item;                


               17  Respondent also reduced petitioner’s itemized deductions           
          for 1996, 1997, and 1998 because of the increase in petitioner’s            
          income.  This adjustment is purely computational.                           



Page:  Previous  25  26  27  28  29  30  31  32  33  34  35  36  37  38  39  40  41  42  43  44  Next

Last modified: May 25, 2011