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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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