Ralph E. and Mildred E. Galyen - Page 8

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          income by the amount of bartering services income reported and              
          disallowing a section 44 credit and a section 162 deduction.                
          Burden of Proof                                                             
               As a general rule, the notice of deficiency is entitled to a           
          presumption of correctness, and the taxpayer bears the burden of            
          proving the Commissioner’s deficiency determinations incorrect.             
          Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933).                  
          Section 7491(a), however, provides that if a taxpayer introduces            
          credible evidence and meets certain other prerequisites, the                
          Commissioner shall bear the burden of proof with respect to                 
          factual issues relating to the liability of the taxpayer for a              
          tax imposed under subtitle A or B of the Internal Revenue Code              
          (Code).  For the burden to shift, however, the taxpayer must                
          comply with the substantiation and recordkeeping requirements as            
          provided in the Code and cooperate with the Commissioner.  See              
          sec. 7491(a)(2).                                                            
               Although petitioners claimed that section 7491(a) applies,             
          petitioners failed to introduce sufficient evidence to shift the            
          burden to respondent.  Nonetheless, our findings in this case are           
          based on a preponderance of the evidence.  See Arevalo v.                   
          Commissioner, 124 T.C. 244 (2005).                                          

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