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absence of credible evidence of deductibility, petitioner cannot
sustain. See Bernardo v. Commissioner, supra n.7.
Under section 7491(c), respondent retains the burden of
production (but not the overall burden of proof) with respect to
petitioner’s liability for the accuracy-related penalty under
section 6662(a). See Higbee v. Commissioner, supra at 446-447.
II. Petitioner’s Schedule C Deductions
A. The Parties’ Arguments
On brief, respondent summarizes his position as follows:
Specifically, petitioner failed to offer any evidence,
other than his uncorroborated testimony, that he was
engaged in a trade or business in taxable years 1996,
1997 and 1998[,] and [he] failed to produce adequate
records which substantiate the disallowed Schedule C
expenses in taxable years 1996-2000 * * *.
Petitioner testified at trial and reiterates on brief that
he has been engaged in various business activities for the past
25 years, and that, as petitioner puts it on brief, during the
1996-2000 period, he was actively “developing ideas for
companies, creating companies, and expanding on earlier research
projects and ideas, developing patents, and protecting the
company interests with law suits [sic], etc. as well as using his
building for business purposes and improving the building.”
B. Deductibility of Expenses Under Section 162(a)
Section 162(a) permits a deduction for “all the ordinary and
necessary expenses paid or incurred during the taxable year in
carrying on any trade or business”. Any amount claimed as a
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