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amounts of which respondent conceded at trial), other unexplained
bank deposits, flowthrough losses from the disregarded Sweetbush
Trust, and increased Social Security benefits. Respondent
further determined that petitioners were subject to self-
employment tax, with a deduction for one-half of the self-
employment tax. Lastly, respondent determined that petitioners
were liable for the accuracy-related penalty under section
6662(a).
Petitioners have the burden of proving that respondent’s
determination is incorrect. Rule 142(a); Welch v. Helvering, 290
U.S. 111, 115 (1933). Section 7491 does not apply in this case
because petitioners did not cooperate with respondent during the
audit.
At trial, petitioners did not introduce any credible
evidence. Based on this record, we find that petitioners have
failed to meet their burden of proof.
At trial, respondent did not carry his burden of production
with respect to the section 6662(a) penalty. Sec. 7491(c).
Therefore, we do not sustain respondent’s determination that
petitioners were liable for a penalty under section 6662(a).
All of the arguments and contentions that have not been
analyzed herein have been considered, but do not require any
further discussion.
Reviewed and adopted as the report of the Small Tax Case
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Last modified: May 25, 2011