- 6 - Analysis Generally, the burden of proof is on the taxpayer. Rule 142(a)(1). The burden of proof may shift to the Commissioner under section 7491 if the taxpayer establishes compliance with the requirements of section 7491(a)(2)(A) and (B) by substantiating items, maintaining required records, and fully cooperating with the Secretary’s reasonable requests. Section 7491 is effective with respect to Court proceedings arising in connection with examinations by the Commissioner commencing after July 22, 1998, the date of its enactment by section 3001(a) of the Internal Revenue Service Restructuring and Reform Act of 1998, Pub. L. 105-206, 112 Stat. 685, 726. The burden of production remains with the Commissioner with respect to the taxpayer’s liability for any penalty or addition to tax. Sec. 7491(c); Higbee v. Commissioner, 116 T.C. 438 (2001). It is not clear from the record when respondent commenced the examination of petitioners’ return; therefore, we are uncertain whether section 7491 is applicable. Nevertheless, petitioners have not established that they complied with its requirements. Accordingly, even if section 7491 were applicable, we conclude that the burden of proof remains upon petitioners. 1. Unreported Income Gross income means all income from whatever source derived. Sec. 61. When a taxpayer fails to provide adequate recordsPage: Previous 1 2 3 4 5 6 7 8 9 10 11 Next
Last modified: May 25, 2011