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In certain circumstances, if the taxpayer introduces
credible evidence with respect to any factual issue relevant to
ascertaining the proper tax liability, section 7491 places the
burden of proof on the Commissioner. Sec. 7491(a). Section
7491(a) applies only if an individual taxpayer complies with
substantiation requirements, maintains required records, and
cooperates fully with reasonable requests by the Commissioner for
witnesses, information, documents, meetings, and interviews.
Sec. 7491(a)(2). Credible evidence has been described as “‘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’”. Higbee v.
Commissioner, 116 T.C. 438, 442 (2001) (quoting H. Conf. Rept.
105-599, at 240 (1998), 1998-3 C.B. 755, 994). Section 7491 is
effective with respect to court proceedings arising in connection
with examinations commencing after July 22, 1998. Internal
Revenue Service Restructuring and Reform Act of 1998, Pub. L.
105-206, sec. 3001(c), 112 Stat. 727.
The parties stipulated that the examination of petitioner’s
1996 Federal income tax return commenced after the effective date
of section 7491, and petitioner has established that he made the
$50,000 payment to Ms. Springer in 1996 pursuant to the
provisions in the marital settlement and the divorce decree
requiring the payment of “alimony for the support and
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Last modified: May 25, 2011