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Respondent determined deficiencies in petitioners’ Federal
income taxes for 2000 and 2001 in the amounts of $11,620 and
$12,348, respectively, and accuracy-related penalties under
section 6662(a) for those years in the amounts of $2,324 and
$2,470, respectively.
The issues for decision are: (1) Whether petitioners were
engaged in an export activity during the years at issue, and, if
so, whether such activity was an activity not engaged in for
profit under section 183; (2) whether petitioners are entitled to
deductions for expenses relating to that activity under section
162(a); and (3) whether petitioners are liable for the section
6662(a) accuracy-related penalties.2
Some of the facts were stipulated. Those facts, with the
exhibits annexed thereto, are so found and made part hereof.
Petitioners resided at Katy, Texas, at the time the petition was
filed.
Carlos H. Gonzalez (petitioner) is a senior petroleum
engineer for Conoco, Inc. (Conoco), a major oil company in
2Under sec. 7491(a), where a taxpayer introduces credible
evidence with respect to any factual issue relevant to
ascertaining the liability of the taxpayer, the burden of proof
shifts to the Commissioner. Petitioners have not produced
credible evidence with respect to the principal issue, nor have
petitioners, under sec. 7491(a)(2)(B), maintained records
required with regard to substantiating their claimed expenses;
therefore, the burden of proof does not shift to respondent.
However, as to the penalties, the burden of production is on
respondent. Sec. 7491(c). The Court’s holding in this case is
based upon due regard to the requirements of sec. 7491.
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Last modified: May 25, 2011