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Respondent determined a deficiency of $11,746 in
petitioners’ Federal income tax for the year 2000 and the
accuracy-related penalty under section 6662(a) in the amount of
$2,298.
The issues for decision are: (1) Whether, for the year at
issue, Michael Allen Byer (petitioner) was a statutory employee
as a full-time life insurance salesman under section
3121(d)(3)(B) and section 31.3121(d)-1(d)(3)(ii), Employment Tax
Regs.; (2) whether petitioners are entitled to deductions for
disallowed trade or business expenses incurred in connection with
petitioner’s insurance activity; and (3) whether petitioners are
liable for the section 6662(a) accuracy-related penalty for the
year at issue.2
Some of the facts were stipulated. Those facts, with the
exhibits annexed thereto, are so found and made part hereof.
2Sec. 7491(a) shifts the burden of proof to the Commissioner
where the taxpayer introduces credible evidence with respect to
any factual issue, if the taxpayer has complied with the
requirements for substantiation of any item at issue, has
maintained records with respect to such items, and has cooperated
with reasonable requests by respondent for such information.
Since the principal issue as to whether petitioner was a
statutory employee is essentially a question of law, and the
facts relating thereto are not in dispute, the question of who
has the burden of proof is not material. As to the expenses
relating to the principal issue, petitioners did not cooperate
with respondent’s requests for substantiating information prior
to trial, therefore, the burden of proof does not shift to
respondent. As to the sec. 6662(a) penalty, the burden of
production is on respondent. The Court’s conclusions, therefore,
on all issues, are made with due consideration to the burden of
proof requirements of sec. 7491.
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