James S Sparkman - Page 17

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        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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Last modified: May 25, 2011