- 17 -
respondent increased Sparkman’s business income by the gross
receipts of Mercury Solar PTO, including $195,275 of rebate income
that HECO reported on a Form 1099 to Mercury Solar PTO. In
addition, respondent disallowed losses that Sparkman reported as
flowing through from HEH on the ground that Sparkman had failed to
substantiate these amounts. Respondent determined that the
increases to Sparkman’s income resulting from these adjustments
were subject to self-employment tax. Finally, respondent
determined penalties and additions to tax pursuant to sections
6651 and 6662.
By separate notice of deficiency issued to Mercury Solar PTO,
respondent disallowed all of Mercury Solar PTO’s claimed
deductions and made other adjustments increasing Mercury Solar
PTO’s reported income. Among other adjustments, respondent
increased Mercury Solar PTO’s 1999 income by $195,275, to reflect
the HECO rebate payments.
OPINION
I. Burden of Proof
Petitioners have not claimed or established that section
7491(a) shifts the burden of proof to respondent with respect to
any factual issue. Accordingly, petitioners bear the burden of
17(...continued)
do not address them.
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