Frederick Smith, Jr. and Vanessa Smith - Page 7




                                        - 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 records                 






Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  Next

Last modified: May 25, 2011