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142(a)(2). Credible evidence is “the quality of evidence which,
after critical analysis, * * * [a] court would find sufficient *
* * to base a decision on the issue if no contrary evidence were
submitted.”6 Baker v. Commissioner, 122 T.C. 143, 168 (2004);
Higbee v. Commissioner, 116 T.C. 438, 442 (2001). Section
7491(a)(1) applies only if the taxpayer complies with
substantiation requirements, maintains all required records, and
cooperates with the Commissioner for witnesses, information,
documents, meetings, and interviews. Sec. 7491(a)(2).
The parties have stipulated that petitioner failed to
substantiate two of the five deductions at issue (i.e.,
additional claimed depreciation and increased office expense).
Moreover, for the reasons stated infra, in section I.B., we find
that petitioner has failed to introduce “credible evidence” that
any of the expenses deducted on Schedule C of the 1999 amended
return were part of an activity engaged in by her for profit,
which would have rendered those expenses deductible under section
162. Therefore, it follows that petitioner bears the burden of
proof with respect to her entitlement to those deductions
pursuant to Rule 142(a).7
6 We interpret the quoted language as requiring the
taxpayer’s evidence pertaining to any factual issue to be
evidence the Court would find sufficient upon which to base a
decision on the issue in favor of the taxpayer.
7 Petitioner’s failure to introduce “credible evidence”
(continued...)
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