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Credible evidence is the quality of evidence which,
after critical analysis, the court would find
sufficient upon which to base a decision on the issue
if no contrary evidence were submitted (without regard
to the judicial presumption of IRS correctness). A
taxpayer has not produced credible evidence for these
purposes if the taxpayer merely makes implausible
factual assertions, frivolous claims, or tax protestor-
type arguments. The introduction of evidence will not
meet this standard if the court is not convinced that
it is worthy of belief. If after evidence from both
sides, the court believes that the evidence is equally
balanced, the court shall find that the Secretary has
not sustained his burden of proof. [H. Conf. Rept.
105-599, at 240-241 (1998), 1998-3 C.B. 747, 994-995.]
See Higbee v. Commissioner, 116 T.C. 438 (2001). In support of
his position that amounts received from STL were loans, Mr.
Sowards offered only his self-serving testimony and an alleged
loan document. We find that Mr. Sowards was not a credible
witness; his testimony was vague, inconsistent, and implausible.
Further, as detailed infra, we find that the payments from STL
were received for services that Mr. Sowards rendered. Mr.
Sowards also failed to present credible evidence that other
deposits to his bank accounts were not taxable income or that
deductions disallowed by respondent should be allowed. As such,
we find that Mr. Sowards failed to present credible evidence.
See Higbee v. Commissioner, supra; Tokh v. Commissioner, T.C.
Memo. 2001-45, affd. 25 Fed. Appx. 440 (7th Cir. 2001).
In addition, the application of section 7491(a)(1) is
limited by section 7491(a)(2), which provides in pertinent part:
SEC. 7491(a). Burden Shifts Where Taxpayer
Produces Credible Evidence.--
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