8
had purchased those items. Third, petitioner’s testimony lacked
credibility in other areas, such as his testimony that he neither
bought nor sold equipment or tools, which, as discussed above,
was inconsistent with the documents prepared at the time of the
sale.
4. Conclusion
We concluded that petitioner’s basis in the Chevron gas
station property he sold in 1995 was $5,000.
B. Whether Petitioner Is Liable for the Addition to Tax for
1995 for Failure To File
Petitioner contends that he and his spouse filed their 1995
Federal income tax return.
A taxpayer is liable for an addition to tax of up to 25
percent for failure to file a Federal income tax return unless
the failure was due to reasonable cause and not willful neglect.
Sec. 6651(a)(1); United States v. Boyle, 469 U.S. 241, 245
(1985). In court proceedings arising in connection with
examinations beginning after July 22, 1998, section 7491(c)
places on the Commissioner the burden of producing evidence
showing that it is appropriate to impose the addition to tax
under section 6651(a)(1).4 Dennis Brown (Brown), a revenue agent
for respondent, testified that, according to respondent’s
4 Dennis Brown, an agent for respondent, testified that
respondent prepared a 1995 substitute for return and processed it
in 1997. This suggests that the examination began before July
22, 1998, and that sec. 7491(c) does not apply.
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