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did not satisfy the prerequisites under section 7491(a)(1) and
(2) for such a shift.
The Commissioner bears the burden of production in any court
proceeding with respect to an individual’s liability for
penalties or additions to tax. Sec. 7491(c). To meet this
burden, the Commissioner must come forward with sufficient
evidence indicating that it is appropriate to impose the relevant
penalty or addition to tax. Higbee v. Commissioner, 116 T.C.
438, 446 (2001). In instances where an exception to the penalty
or addition to tax is afforded upon a showing of reasonable
cause, the taxpayer bears the burden of showing such cause. Id.
at 447.
B. Filing Requirement
The Code imposes a Federal tax on the taxable income of
every individual. Sec. 1. Gross income for the purposes of
calculating taxable income is defined as “all income from
whatever source derived”. Sec. 61(a). This means that
compensations for services, including fees, commissions, and
fringe benefits are considered sources of gross income. Sec.
61(a)(1). Every U.S. resident individual whose gross income for
the taxable year equals or exceeds the exemption amount is (with
enumerated exceptions not applicable here) required to make an
income tax return. Sec. 6012(a)(1)(A). Petitioner had gross
income totaling $8,976 from self-employment for 1998 and gross
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