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After reviewing the record, we find that respondent has
introduced ample evidence connecting the Gouveias to the income-
producing activities of the Pago and McKenzie Trusts. The record
shows that petitioner managed and developed rental real estate
properties owned by the Pago Trust and that petitioner worked
full time in furtherance of the automobile restoration business
allegedly conducted by the McKenzie Trust. Moreover, the Pago
and McKenzie Trusts compensated petitioner for his management
services, and the Gouveias received distributions from the Pago
Trust. See Johnston v. Commissioner, supra. Accordingly, we
hold that respondent’s determination is entitled to the
presumption of correctness.
We also hold that section 7491(a) does not shift the burden
of proof to respondent. Petitioners failed to produce credible
evidence that the Pago and McKenzie Trusts should be respected
for Federal income tax purposes as required by section
7491(a)(2). Moreover, petitioners did not prove that they had
complied with relevant substantiation requirements, that they had
maintained all records required by the Internal Revenue Code, and
that they had cooperated with reasonable requests for witnesses,
information, documents, meetings, and interviews. Consequently,
section 7491(a) does not shift the burden of proof on the factual
issues raised in this case to respondent, and petitioners must
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