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incorporated herein by this reference. At the time they filed
the petition, petitioners resided in Harbor City, California.
On Schedules C, Profit or Loss From Business, of their
income tax returns for 1995, 1996, 1997, and 1998, petitioners
reported gross receipts from the minimart of $413,145, $437,331,
$509,512, and $487,614, respectively. Petitioners signed their
1995 tax return on July 3, 1997, and respondent received their
1995 return on July 14, 1997.
Petitioners reported to the State Board of Equalization that
their gross receipts from the minimart in 1995 were $419,509.
OPINION
I. Burden of Proof: Section 7491(a)
At the conclusion of the trial, petitioners raised for the
first time the issue of the burden of proof shifting to
respondent pursuant to section 7491(a). Petitioners’ case was
set for trial five times, petitioners received five standing
pretrial orders, and petitioners were warned on the record more
than once about the consequences of failure to comply with the
standing pretrial order. Nonetheless, petitioners failed to
comply with several aspects of the standing pretrial order,
including failure to submit a trial memorandum. Petitioners did
not introduce credible evidence with respect to the factual
issues relevant to ascertaining their liability. See sec.
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