- 34 -
payments represented a return of petitioners’ investment and are
not includable income as interest simply because the payments
were reported as interest on statements of the investment
accounts. Cf. Burnet v. Logan, 283 U.S. 404 (1931).
Petitioners have not addressed or provided any information
regarding the remaining $61 of interest reported on the return of
the OMK Family Trust that respondent determined in the notice of
deficiency was taxable to petitioners. Respondent’s
determination in the notice of deficiency is presumptively
correct, and petitioners have the burden of proving that no part
of the amounts received constituted interest or was otherwise not
taxable to them. Rule 142(a); Welch v. Helvering, 290 U.S. 111
(1933). Section 7491(a)(1) does not shift the burden of proof to
respondent. Consequently, $61 of interest determined in the
notice of deficiency is to be included in petitioners’ income.
III. Petitioners Had Additional Capital Gain of $103,791 From the
Sale of Mutual Fund Shares
Respondent also determined that petitioners had $123,791 of
unreported capital gain. The explanation in the notice of
deficiency issued to petitioners stated that petitioners’ capital
gain was increased because the OMK trusts are disregarded for
12(...continued)
T.C. Memo. 1993-393, affd. without published opinion 72 F.3d 135
(9th Cir. 1995); see also Premji v. Commissioner, T.C. Memo.
1996-304, affd. 139 F.3d 912 (10th Cir. 1998).
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