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as to a factual issue relevant to the liability for tax may shift
to the Commissioner if the taxpayer introduces credible evidence
and satisfies the requirements under section 7491(a)(2) to
substantiate items, maintain required records, and fully
cooperate with respondent’s reasonable requests. Sec. 7491(a).
In the present case, the burden of proof remains on petitioners
because they have not established that they have complied with
the requirements of section 7491(a). In any event, the
disposition of this case does not depend upon the burden of
proof.
Petitioners assert that the Iranian revolutionary government
expropriated the properties in 1979. Petitioners remained in
Iran until they came to the United States in 1988. Petitioners
assert that as a result of their continuing efforts to reclaim
the properties, the losses actually occurred at a later date. We
have no doubt that petitioners sustained losses upon the
expropriation of the properties, and the question arises as to
the amount of the losses and the year or years of the losses.5
Section 1.165-1(d)(2)(i), Income Tax Regs., provides that if
a casualty or other event occurs which may result in a loss and
5 While the record does not establish the exact amount of
petitioners’ losses, petitioner presented copies of deeds and
credible testimony as to the cost of the properties involved.
However, as a result of our conclusion that the losses occurred
prior to the year in which they were claimed, and are therefore
not deductible, we need not reach any conclusion as to the amount
of the loss.
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Last modified: May 25, 2011