- 11 - Stat. 727. Under section 7491, the burden of proof shifts from the taxpayer to the Commissioner if the taxpayer produces credible evidence with respect to any factual issue relevant to ascertaining the taxpayer’s tax liability. Sec. 7491(a)(1). However, section 7491(a)(1) applies with respect to an issue only if the taxpayer has complied with the requirements under the Code to substantiate any item, has maintained all records required under the Code, and has cooperated with reasonable requests by the Commissioner for witnesses, information, documents, meetings, and interviews. See sec. 7491(a)(2)(A) and (B). Petitioner failed to appear at trial or to produce any credible evidence. Petitioner has no records or information as to where the pay phones are located or as to the amount of revenue that they produced. Therefore, the burden of proof has not shifted to respondent. Nonetheless, our findings in this case are based on a preponderance of the evidence. Depreciation Deduction Section 167(a) allows as a depreciation deduction a reasonable allowance for the “exhaustion, wear and tear” of property (1) used in a trade or business or (2) held for the production of income. Sec. 167(a)(1) and (2). Depreciation deductions are based on an investment in and actual ownership of property rather than the possession of bare legal title. See Grant Creek Water Works, Ltd. v. Commissioner, 91 T.C. 322, 326Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011