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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). However,
in certain circumstances, 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). Section
7491(a)(1) applies only if an individual taxpayer complies with
substantiation requirements, maintains all required records, and
cooperates with reasonable requests by the Commissioner for
witnesses, information, documents, meetings, and interviews.
Sec. 7491(a)(2).
In this case, section 7491 is inapplicable because
petitioner did not introduce any credible evidence with respect
to the gambling winnings and Social Security benefits and failed
to comply with the substantiation and recordkeeping requirements.
The burden of proof remains on petitioner to show that
respondent’s determination is in error.
A. Gambling Winnings and Losses
Section 61(a) provides that gross income includes all income
from whatever source derived unless excludable by a specific
provision of the Code. No specific code section excludes
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Last modified: May 25, 2011