Michael W. Allen - Page 5

          for the accuracy-related penalty.4  We address each issue in                
          turn, after first considering the burden of proof.                          
          I.   Burden of Proof                                                        
               Petitioner generally has the burden of proof.  See Rule                
          142(a).  Petitioner asserted for the first time in his reply                
          brief that the burden of proof should be shifted to respondent.             
          Section 7491 applies to this case because the examination of                
          petitioner’s income tax returns for the years at issue began                
          after the statute’s effective date, but petitioner failed to                
          substantiate the claimed expenses and failed to maintain adequate           
          records.5  Accordingly, petitioner does not meet the requirements           

               4Petitioner also asserts for the first time in his post-               
          trial brief that he used an IRA distribution he received in 1999            
          to finance a first-time home purchase.  Petitioner stipulated               
          before trial, however, that he had not reached age 59-1/2 when he           
          received either IRA distribution, that neither IRA distribution             
          was received on account of death, disability, medical expenses,             
          higher education expenses, or to finance a first-time home                  
          purchase, and that both IRA distributions were taxable.   A                 
          stipulation of fact is binding on the parties and is treated as a           
          conclusive admission.  Rule 91(e).  The Court will not permit a             
          party to a stipulation to qualify, change, or contradict the                
          stipulation except where justice requires.  Id.  Petitioner did             
          not ask to be relieved from the stipulations or present grounds             
          that he should not be bound to his admission.  See id.; Israel v.           
          Commissioner, T.C. Memo. 2003-338; Said v. Commissioner, T.C.               
          Memo. 2003-148, affd. 112 Fed. Appx. 608 (9th Cir. 2004).  We               
          conclude that the stipulations are binding, and, accordingly, we            
          need not further consider petitioner’s assertions regarding his             
          IRA distributions.                                                          
               5Sec. 7491(a) shifts the burden of proof to the Commissioner           
          under certain circumstances if the taxpayer introduces credible             
          evidence and satisfies the necessary substantiation and                     
          documentation requirements.  Sec. 7491 is effective with respect            
          to court proceedings arising in connection with examinations by             
          the Commissioner commencing after July 22, 1998, the date of                
          enactment of the Internal Revenue Service Restructuring and                 
          Reform Act of 1998, Pub. L. 105-206, sec. 3001(a), 112 Stat. 726.           

Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  Next

Last modified: May 25, 2011