Thomas and Janice Gleason - Page 13

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          provided during the examination.4  The Court therefore cannot               
          conclude that section 7491(a) effects any shift of burden in the            
          instant case.                                                               
               Section 7491(c) provides that “the Secretary shall have the            
          burden of production in any court proceeding with respect to the            
          liability of any individual for any penalty, addition to tax, or            
          additional amount imposed by this title.”  The Commissioner                 
          satisfies this burden of production by “[coming] forward with               
          sufficient evidence indicating that it is appropriate to impose             
          the relevant penalty” but “need not introduce evidence regarding            
          reasonable cause, substantial authority, or similar provisions.”            
          Higbee v. Commissioner, 116 T.C. 438, 446 (2001).  Rather, “it is           
          the taxpayer’s responsibility to raise those issues.”  Id.  The             
          Court’s conclusions with respect to burden under section 7491(c)            
          will be detailed infra in conjunction with our discussion of the            
          section 6662(a) penalties.                                                  
          II.  General Rules--S Corporations                                          
               Sections 1366 through 1368 govern the tax treatment of S               
          corporation shareholders with respect to their investments in               
          such entities.  Section 1366(a)(1) provides that a shareholder              
          shall take into account his or her pro rata share of the S                  
          corporation’s items of income, loss, deduction, or credit for the           

               4 The Court notes that petitioners have at no time submitted           
          a specific motion to reopen the record for receipt of additional            
          evidence.                                                                   





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