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by leave of the Court, and leave shall be given freely when
justice so requires. Rule 41(a). A party may move to amend the
pleadings to conform to the proof presented at trial. Rule
41(b)(2). Prejudice to the other party is a key factor in
deciding whether to allow an amendment to the pleadings. Kroh v.
Commissioner, 98 T.C. 383, 389 (1992).
We granted respondent’s motion because (1) the third-party
Form 1099, Miscellaneous Income, from Phoenix Investment shows
that petitioner received $830.31 in dividends in 2000, (2)
respondent did not include this amount when determining
petitioner’s income for 2000, and (3) there is no prejudice to
petitioner.
Respondent bears the burden of proving the increased
deficiency for 2000 and additions to tax raised in the pleadings.
See Rule 142(a).
Petitioner contends that respondent generally bears the
burden of proof. We disagree. The burden of proof for a factual
issue relating to liability for tax may shift to the Commissioner
under certain circumstances. Sec. 7491(a). Under section
7491(a), the burden of proof with respect to a factual issue
relevant to a taxpayer’s liability for tax shifts from the
taxpayer to the Commissioner if, inter alia, the taxpayer has:
(a) Complied with substantiation requirements under the Internal
Revenue Code, sec. 7491(a)(2)(A); (b) maintained all records
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