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was discovered he had scarlet fever. At this hospital, it was
determined that his psychiatric symptomology was due to delirium.
During 2001, petitioner received disability pension income
of $3,468 from the Defense Finance and Accounting Service.
By notice of deficiency, respondent determined that
petitioner’s disability pension income of $3,468 from the Defense
Finance and Accounting Service in tax year 2001 is not excludable
from gross income under section 104(b)(2)(C).
Discussion
In general, the Commissioner’s determination set forth in a
notice of deficiency is presumed correct, and the taxpayer bears
the burden of showing that the determination is in error. Rule
142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933). In certain
circumstances, however, if the taxpayer introduces credible
evidence with respect to any factual issue relevant to
ascertaining the proper tax liability, section 7491 places the
burden of proof on the Commissioner. Sec. 7491(a)(1). Credible
evidence is “‘the quality of evidence which, after critical
analysis, * * * [a] court would find sufficient * * * to base a
decision on the issue if no contrary evidence were submitted’”.
Higbee v. Commissioner, 116 T.C. 438, 442 (2001) (quoting H.
Conf. Rept. 105-599, at 240-241 (1998), 1998-3 C.B. 747, 994-
995). Section 7491(a)(1) applies only if an individual taxpayer
complies with substantiation requirements, maintains all required
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