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advertising expenses, listed generally as “Postage” or “P.O. Box
Rental”; office expenses, also listed generally in categories
such as “Supplies”, “Computer Ware”, and “Telephone”; and a fee
to the Office of Banks and Real Estate, State of Illinois. The
summaries did not report the purpose of any of the expenses
listed.
OPINION
I. Burden of Proof
As a general rule, the Commissioner’s determinations are
presumed correct, and the taxpayer bears the burden of proving
that those determinations are erroneous. Rule 142(a). This
rule, however, is subject to the provisions of section 7491(a),
under which the burden of proof may, under certain circumstances,
be shifted to the Commissioner.
On the basis of the record, we hold that section 7491(a)
does not operate to place the burden of proof on respondent
because: (1) Petitioners did not introduce credible evidence
with respect to any factual issue relevant to ascertaining their
liability; (2) petitioners did not comply with the requirements
to substantiate their deductions; and (3) petitioners did not
maintain all records required. Sec. 7491(a); see Higbee v.
Commissioner, 116 T.C. 438, 440-441 (2001).
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Last modified: May 25, 2011