Joseph A. and Sari F. Deihl - Page 15

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          See also Internal Revenue Service Restructuring and Reform Act of           
          1998, Pub. L. 105-206, sec. 3001(c), 112 Stat. 727, regarding               
          effective date.  Section 7491 is applicable here in that                    
          examination of petitioner’s 1996, 1997, and 1998 tax years began            
          after July 22, 1998.                                                        
               With respect to the deficiency determinations in dispute,              
          the operative rules are contained in section 7491(a).                       
          Petitioners make the assertion, apparently for the first time on            
          opening brief, that the burden of proof as to factual issues                
          shifts to respondent because “Petitioners have produced credible            
          testimony and documents, most especially regarding their reliance           
          on CPA’s [sic] and an attorney.”  The Court, however, concludes a           
          shift is not appropriate on this record for the reasons set forth           
          below.                                                                      
               First, as can be gleaned from the preceding discussion, the            
          Court finds that petitioners have failed to introduce credible              
          evidence with respect to the majority of the individual                     
          expenditures in contention.  Credible evidence for purposes of              
          section 7491(a) is defined 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.  Such quality is lacking in much of what has             






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