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105-206, sec. 3001(c)(1), 112 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).
Petitioners have not argued that they have satisfied any of
the criteria of section 7491(a)(1) or (2). In any event, the
burden of proof does not play a role in the case before us,
because there is no dispute as to a factual issue.
II. Depreciation Deduction
As we indicated in Arevalo v. Commissioner, 124 T.C. at 251,
depreciation deductions are based on an investment in and actual
ownership of property rather than the possession of bare legal
title. “A taxpayer has received an interest in property that
entitles the taxpayer to depreciation deductions only if the
benefits and burdens of ownership with respect to the property
have passed to the taxpayer.” Id. (and cases cited thereat).
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Last modified: May 25, 2011