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petitioner substantiated his cost basis in the underlying
investments and respondent conceded at trial that petitioner is
entitled to a net capital loss of $771. In addition, petitioner
acknowledged receiving payments from Compton Unified School
District (Compton Unified) in the neighborhood of $27,325, but
claims that most of these payments were received as workers’
compensation benefits.
With regard to the issues for decision, we address each item
separately and, for convenience, we combine our findings of fact
and conclusions.
Discussion
In general, the Commissioner’s determinations set forth in a
notice of deficiency are presumed correct, and the taxpayer bears
the burden of showing that the determinations are in error. Rule
142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933). Pursuant
to section 7491,3 the burden of proof as to factual matters
shifts to respondent under certain circumstances. Petitioner has
neither alleged that section 7491(a) applies nor established his
compliance with the requirements of section 7491(a)(2)(A) and (B)
to substantiate items, maintain records, and cooperate fully with
3 Sec. 7491 applies to court proceedings arising in
connection with examinations commencing after July 22, 1998.
Internal Revenue Service Restructuring and Reform Act of 1998,
Pub. L. 105-206, sec. 3001(c), 112 Stat. 727. It appears that
the examination of petitioner’s 1997 tax return commenced after
the effective date of sec. 7491.
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