- 12 -
11/30/95 11/30/96 11/30/97
Food & lodging1 $12,433 $19,919 $19,573
Medical 3,516 5,751 5,456
Total dividends 15,949 25,670 25,029
1The record does not explain why the amounts of
dividends for food and lodging expenses included in the
Weeldreyers’ income exceed the amounts disallowed as
deductions to Dreyer Farms.
OPINION
Issue 1. Expenses Incurred by Dreyer Farms To Provide Medical
Benefits, Food, and Housing to the Weeldreyers in 1995,
1996, and 1997
A. Positions of the Parties10
Respondent disallowed deductions taken by Dreyer Farms for
medical costs (health insurance premiums and other medical care
expenses), food, lodging (including property insurance, property
taxes, remodeling, landscaping, maintenance and repair,
telephone, and utilities for the farmhouse), and depreciation of
the farmhouse. Respondent asserts that the medical costs, food,
10Under certain circumstances, sec. 7491 places the burden
of proof or production on the Commissioner. Sec. 7491 applies to
court proceedings arising in connection with tax examinations
beginning after July 22, 1998. Internal Revenue Service
Restructuring and Reform Act of 1998, Pub. L. 105-206, sec.
3001(a), 112 Stat. 726. Petitioners timely filed their returns
for the years at issue. Hence, all of the returns were filed on
or before Apr. 15, 1998. The record does not disclose when the
examination of petitioners’ tax returns began, and it is possible
that the examination began before July 23, 1998. Petitioners do
not contend that sec. 7491 applies in these cases, and they have
not otherwise asserted that respondent has the burden of proof or
production with respect to any issue presented in these cases.
We therefore conclude that sec. 7491 does not apply, and
petitioners have the burden of proof and production.
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