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using the standard deduction. Further, respondent, in the notice
of deficiency, disallowed petitioners’ claimed deductions for
Schedule C expenses of $10,659 and Schedule E expenses and
depreciation of $1,438 and $1,930, respectively.
At trial, respondent conceded that petitioners have
substantiated taxes paid of $1,409, mortgage interest of $3,852,
and medical expenses of $4,468. However, due to certain
limitations these amounts still do not exceed the standard
deduction for taxpayers married filing jointly in 2002.
Discussion
In general, the Commissioner’s determination set forth in a
notice of deficiency is presumed correct. Welch v. Helvering,
290 U.S. 111, 115 (1933). In pertinent part, Rule 142(a)(1)
provides the general rule that “The burden of proof shall be upon
the petitioner”. In certain circumstances, however, if the
taxpayer introduces credible evidence with respect to any factual
issue relevant to ascertaining the proper tax liability, section
7491 places the burden of proof on the Commissioner. Sec.
7491(a)(1); Rule 142(a)(2). Credible evidence is “‘the quality
of evidence which, after critical analysis, * * * [a] court would
find sufficient * * * to base a decision on the issue if no
contrary evidence were submitted’”.1 Baker v. Commissioner, 122
1We interpret the quoted language as requiring the
taxpayer’s evidence pertaining to any factual issue to be
(continued...)
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