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$90,000.
Petitioner filed Form 1120, U.S. Corporation Income Tax
Return, for the year at issue. In that return, petitioner, inter
alia, claimed a deduction of $902,476 for the payment under
petitioner’s license agreement.
Respondent issued a notice of deficiency (notice) to peti-
tioner. In the notice, respondent determined to disallow the
deduction of $902,476 that petitioner claimed for the payment
under petitioner’s license agreement.
OPINION
Although respondent must have commenced respondent’s exami-
nation of petitioner’s return for the year at issue after July
22, 1998, the parties do not address section 7491(a).5 On the
record before us, we find that petitioner has failed to carry its
burden of establishing that it satisfied the applicable require-
ments of section 7491(a)(2). On that record, we conclude that
petitioner’s burden of proof, see Rule 142(a); Welch v.
Helvering, 290 U.S. 111, 115 (1933), does not shift to respondent
under section 7491(a). Moreover, with respect to the deduction
that petitioner is claiming for the year at issue, deductions are
strictly a matter of legislative grace, and petitioner bears the
burden of proving that it is entitled to the deduction claimed.
5All section references are to the Internal Revenue Code in
effect for the year at issue. All Rule references are to the Tax
Court Rules of Practice and Procedure.
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Last modified: May 25, 2011