-114-
In certain cases, the burden of proof shall be on the
Commissioner if, in any court proceeding, the taxpayer introduces
credible evidence with respect to any factual issue relevant to
ascertaining the liability of the taxpayer for any tax imposed by
subtitle A or B of the Code. Sec. 7491(a)(1).83 Nonetheless, in
the case of a partnership, corporation, or trust, section
7491(a)(1) applies only if the taxpayer meets the net worth
limitations that apply for awarding attorney’s fees pursuant to
section 7430; i.e., a corporation, trust, or partnership whose
net worth exceeds $7 million is ineligible for the benefits of
section 7491(a)(1). Secs. 7491(a)(2)(C), 7430(c)(4)(A)(ii); 28
U.S.C. sec. 2412(d)(1)(B) and (2)(B) (as in effect on Oct. 22,
1986). Petitioner has not alleged, and the record does not
establish, that SMP or Corona meets these requirements.
Accordingly, section 7491(a) does not apply. See H. Conf. Rept.
105-599, at 240, 242 (1998), 1998-3 C.B. 747, 994, 996 (stating
that the taxpayer has the burden of proving it meets the
requirements in sec. 7491(a)(2)).
Except for the items raised as new matter in respondent’s
amendment to answer, we conclude that petitioner bears the burden
83 Sec. 7491 was added to the Code in the Internal Revenue
Service Restructuring and Reform Act of 1998, Pub. L. 105-206,
sec. 3001, 112 Stat. 726, and is effective with respect to court
proceedings arising in connection with examinations commencing
after July 22, 1998. The parties agree that the examination in
these cases commenced after July 22, 1998.
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