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142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933). Pursuant
to section 7491, the burden of proof as to factual matters shifts
to the Commissioner 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
respondent’s reasonable requests. Therefore, the burden of proof
remains on petitioner with respect to the issues set forth in the
notice of deficiency.
As to the new issue tried by the consent of the parties,
the burden of proof is on respondent. Rule 142(a); Wott v.
Commissioner, T.C. Memo. 1986-319, affd. without published
opinion 819 F.2d 1143 (7th Cir. 1987). In addition, respondent
has the burden of production under section 7491(c) with respect
to the addition to tax and penalty.
A. Petitioner’s Pro Rata Share of Income From Edgington Mullins
In determining his or her income tax, a shareholder in an S
corporation must take into account his or her pro rata share of
the S corporation’s “nonseparately computed income or loss”.
Sec. 1366(a)(1)(B). A selling shareholder’s pro rata share of S
corporation income for a taxable year is calculated by allocating
an equal portion of the corporation’s items to each day in the
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