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1998, however, may operate in specified circumstances to place
the burden on the Commissioner. Internal Revenue Restructuring &
Reform Act of 1998, Pub. L. 105-206, sec. 3001(c), 112 Stat. 727.
With respect to factual issues and subject to enumerated
limitations, section 7491(a) may shift the burden of proof to the
Commissioner in instances where the taxpayer has introduced
credible evidence. Concerning penalties and additions to tax,
section 7491(c) places the burden of production on the
Commissioner.
Although the record in this case is not explicit as to when
the underlying examination began, it is clear that, at least with
respect to 1998, section 7491 would be applicable. In any event,
respondent conceded at trial that section 7491 likely applied to
this matter. Nonetheless, the Court finds it unnecessary to
decide whether the burden should be shifted under section
7491(a). The record in this case is not evenly weighted and
enables us to render a decision on the merits based upon a
preponderance of the evidence, without regard to burden of proof.
II. Section 104(a) Exclusion
A. General Rules
As a general rule, the Internal Revenue Code imposes a
Federal tax on the taxable income of every individual. Sec. 1.
Section 61(a) specifies that “Except as otherwise provided”,
gross income for purposes of calculating such taxable income
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