Mario O. and Elsie R. Garza - Page 7

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          The deficiencies also included self-employment taxes for 1999,              
          2000, and 2001, as respondent determined these commissions                  
          constituted self-employment income.  Additionally, respondent               
          determined an accuracy-related penalty under section 6662(a) in             
          the amount of $863 only for 2001.                                           
               The first issue is whether petitioner earned income from               
          American Life during 1999, 2000, and 2001 under section 61(a)               
          based on commissions that he was entitled to after he no longer             
          worked for American Life that were not paid directly to him but             
          were diverted or applied to his debit accounts to offset the                
          balances he owed.                                                           
               The determinations of the Commissioner in a notice of                  
          deficiency are presumed correct, and the burden is on the                   
          taxpayer to prove that the determinations are in error.                     
          Rule 142(a); Welch v. Helvering, 290 U.S. 111 (1933).8                      



               8Sec. 7491 shifts the burden of proof to the Commissioner if           
          the taxpayer introduces credible evidence with respect to any               
          factual issue relevant to ascertaining a tax liability provided             
          the taxpayer has maintained books and records and has cooperated            
          with reasonable requests by the Commissioner for witnesses,                 
          information, documents, meetings, and interviews.  The burden of            
          proof does not shift in this case principally because petitioners           
          did not maintain accurate books and records of the commissions              
          earned by petitioner with American Life.  Had petitioners                   
          maintained accurate books and records, there likely would have              
          been no need for these proceedings.  The questions raised by                
          petitioner are attributable solely to his failure to maintain               
          books and records.  Sec. 7491(c), however, places upon the                  
          Commissioner the burden of production with respect to any penalty           
          or addition to tax.                                                         





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