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(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
examination in this case began after the statute’s effective
date.
With respect to the income adjustments at issue, petitioners
have not met the prerequisite of section 7491(a)(1) for placing
the burden on respondent. Legislative history defines “credible
evidence” as “the quality of evidence which, after critical
analysis, the court would find sufficient upon which to base a
decision on the issue if no contrary evidence were submitted
(without regard to the judicial presumption of IRS correctness).”
H. Conf. Rept. 105-599, at 240-241 (1998), 1998-3 C.B. 747, 994-
995; see also Higbee v. Commissioner, 116 T.C. 438, 442 (2001).
Here, the evidence produced by petitioners falls short of this
standard.
Petitioners submitted 10 documentary exhibits that they
believe relate to their automotive ventures and offered the
testimony of Mr. Weaver. Three of the documents bear dates in
the period from December 14, 1994, to September 27, 1995. Five
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