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($138,290 deficiency plus $769 shown on the return) for 1998.
Thus, petitioners’ understatements of tax were greater than 10
percent of the amount required to be shown and $5,000 for 1997
and 1998.
Petitioners contend that, in meeting the burden of
production under section 7491(c), respondent may not rely on
their concession in the stipulation that the trusts were invalid
for tax purposes. We disagree. The Commissioner may take a
taxpayer’s concession into account to meet the burden of
production under section 7491(c). See e.g., Montagne v.
Commissioner, T.C. Memo. 2004-252; Oatman v. Commissioner, T.C.
Memo. 2004-236. Petitioners cited no authority to the contrary.
Respondent has met the burden of production even without
considering petitioners’ concession. The stipulation of facts,
documents admitted in evidence, and testimony at trial show that
petitioners personally benefited from trust assets, petitioners
treated trust property as their own, petitioners did not follow
trust formalities, and trust minutes were not reliable. This
evidence is sufficient to meet respondent’s burden of production.
We conclude that respondent has met the burden of producing
evidence showing that it is appropriate to impose the accuracy-
related penalty under section 6662(a) for 1997 and 1998.
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