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payment for services rendered by Harlan was provided to Floors
Trust, and our conclusion that Floors Trust was a sham trust, we
sustain the determination. See Castro v. Commissioner, T.C.
Memo. 2001-115.
VII. Additions to Tax Under Sections 6651(a) and 6654
Pursuant to section 7491(c), respondent bears the burden of
production with respect to the liability for any addition to tax
and must, therefore, present sufficient evidence showing that
such additions are appropriate. Higbee v. Commissioner, 116 T.C.
438, 446 (2001). Once respondent has met his burden of
production, petitioners must come forward with evidence
sufficient to persuade the Court that respondent’s determination
is incorrect. Id. at 447. Petitioners also bear the burden of
proof with regard to issues of reasonable cause, substantial
authority, or similar provisions. Id. at 446.
Respondent determined that Harlan is liable for an addition
to tax pursuant to section 6651(a)(1) for 1998. Section
6651(a)(1) imposes an addition to tax for failure to file a
return (required under the Internal Revenue Code) on the date
prescribed (determined with regard to any extension of time for
filing), unless the taxpayer can establish that such failure is
due to reasonable cause and not due to willful neglect. Sec.
6651(a); Norton v. Commissioner, T.C. Memo. 2002-137. The
parties have stipulated that Harlan did not file a Federal income
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