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California Department of Corporations on December 20, 2001.
There is no evidence that either agency conducted an
investigation.
Discussion
Generally, a taxpayer bears the burden of proof. Rule
142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933). The burden
may shift to the Commissioner if the taxpayer introduces credible
evidence and satisfies the requirements under section 7491(a)(2)
to substantiate items, maintain required records, and fully
cooperate with the Commissioner’s reasonable requests. Sec.
7491(a). In this case petitioner has neither argued that section
7491 is applicable to shift the burden of proof to respondent nor
established that he complied with the requirements of section
7491(a)(2). The resolution of the issue presented does not
depend on which party has the burden of proof. We resolve the
issue on the preponderance of the evidence in the record.
Section 165(a) provides a deduction for any loss sustained
during the taxable year not compensated for by insurance or
otherwise. Under section 165(c), losses for individuals are
limited to (1) losses incurred in a trade or business, (2) losses
incurred in any transaction entered into for profit, though not
connected with a trade or business, and (3) losses of property
not connected with a trade or business or a transaction entered
into for profit, if such losses arise from fire, storm,
shipwreck, or other casualty, or from theft.
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Last modified: May 25, 2011