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Respondent’s primary position is that petitioners must
include in gross income the amount of disability payments
designated as taxable by STRS because they failed to prove a
greater exclusion ratio or amount excludable from gross income.5
In addition, respondent argues that respondent should not be
estopped from asserting deficiencies in petitioners’ 1999 and
2000 taxable years merely because respondent declined to make
adjustments in prior years. In support of this claim, respondent
points out that petitioners do not satisfy the requirements of
laches, equitable estoppel, or collateral estoppel.
II. Burden of Proof
As a general rule, the Commissioner’s determination of a
taxpayer’s liability is presumed correct, and the taxpayer bears
the burden of proving that the determination is improper. Rule
142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933). Although
section 7491 may shift the burden to respondent in specified
circumstances, petitioners here have not established that they
meet the prerequisites under section 7491(a)(1) and (2) for such
a shift. Rather, petitioners did not dispute that they bear the
burden.
5 See supra note 4.
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