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project. Petitioner also testified that the proceeds from these
payments were used to pay for the labor and materials incurred in
the renovation project.
Based upon all of the facts and circumstances of this case,
we find that petitioner’s general contracting business had gross
income of $32,949 in taxable year 2000. We further find that
petitioner has substantiated business expense deductions relating
to his general contracting business of $18,4003 for taxable year
2000. As a result, petitioners realized net income of $12,068
for the taxable year in issue from petitioner’s general
contracting business.
2. Accuracy-Related Penalty
As stated previously, respondent determined that petitioners
are liable for an accuracy-related penalty pursuant to section
6662(a) with respect to the underpayment attributable to the
unreported income of petitioner.
Section 7491(c) provides that the Commissioner shall have
the burden of production in any court proceeding with respect to
the liability of any individual for any penalty, addition to tax,
or additional amount. Specifically, section 7491(c), which was
3It is possible that petitioner has incurred business
expense deductions in excess of this amount; however, due to
petitioner’s lack of clear records, petitioner is unable to
substantiate further deductions, and we are unable to estimate
any further deductions under the rule in Cohan v. Commissioner,
39 F.2d 540 (2d Cir. 1930).
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