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(1) General rule.--If, in any court
proceeding, a taxpayer introduces credible
evidence with respect to any factual issue
relevant to ascertaining the liability of the
taxpayer for any tax imposed by subtitle A or B,
the Secretary shall have the burden of proof with
respect to such issue.
(2) Limitations.--Paragraph (1) shall apply
with respect to an issue only if--
(A) the taxpayer has complied with the
requirements under this title to substantiate
any item;
(B) the taxpayer has maintained all
records required under this title and has
cooperated with reasonable requests by the
Secretary for witnesses, information,
documents, meetings, and interviews; * * *
* * * * * * *
(c) Penalties.--Notwithstanding any other
provision of this title, the Secretary shall have the
burden of production in any court proceeding with
respect to the liability of any individual for any
penalty, addition to tax, or additional amount imposed
by this title. [See also Internal Revenue Service
Restructuring & Reform Act of 1998, Pub. L. 105-206,
sec. 3001(c), 112 Stat. 727, regarding effective date.]
Section 7491 is applicable here in that the examinations in this
case began after the statute’s effective date.
With respect to the income adjustments at issue, petitioner
has not met the prerequisites of section 7491(a)(2) for placing
the burden on respondent. The record reflects a failure on
petitioner’s part to substantiate items, to show that he
maintained adequate books and records, and to cooperate with
respondent. With respect to the accuracy-related penalty, the
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