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value of the annuity. Julie immediately endorsed the check and
distributed one-third of such amount each to Mark, Paul, and
Heidi.
For the taxable year 2001, Anchor issued a Form 1099-R,
Distributions From Pensions, Annuities, Retirement or Profit-
Sharing Plans, IRAs, Insurance Contracts, etc., reporting that
Julie received a gross distribution of $27,641 and a taxable
distribution of $15,936.
On their 2001 Federal income tax return, petitioners did not
report any part of the $27,641 distribution. Respondent
determined that petitioners received gross income of $15,936 from
the surrender of the annuity. Respondent further determined that
petitioners are liable for the accuracy-related penalty under
section 6662(a) for a substantial understatement of income tax.
Petitioners timely filed with the Court a petition
disputing the determined deficiency as well as the accuracy-
related penalty.
Discussion
Generally, the Commissioner’s determinations are presumed
correct, and the taxpayer bears the burden of proving that those
determinations are erroneous. Rule 142(a); Welch v. Helvering,
290 U.S. 111, 115 (1933). The burden of proof may shift to the
Commissioner under section 7491 in certain circumstances.
Petitioners do not contend that section 7491(a) applies in this
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