- 10 -
at 240-241 (1998), 1998-3 C.B. 747, 994-995 (reciting the
definition of credible evidence). In addition, to shift the
burden of proof, taxpayers must maintain all records required by
the Code and regulations and cooperate with reasonable requests
by the Secretary for witnesses, information, documents, meetings,
and interviews. Sec. 7491(a)(2).
Petitioners did not satisfy the prerequisites under section
7491(a)(1) and (2) to shift the burden of proof to respondent.
They did not produce any evidence or documentation disputing
respondent’s determinations or supporting their claims as to the
economic substance of the Lucky Kirt Trust. Specifically, they
failed to provide either a copy of the trust document for Lucky
Kirt Trust or any documentation authorizing Mrs. Lundgren or Mr.
Chisum to act on behalf of the trust or present any credible
evidence other than their own self-serving testimony that the
trust had economic substance or even existed. Similarly,
petitioners did not provide any evidence regarding the capital
gain determination for 2001 and self-employment tax liabilities
for 1999 through 2002. Consequently, except for any penalties
subject to section 7491(c), as to which respondent bears the
initial burden of production, the general premise of Rule 142(a)
remains applicable.
III. Lucky Kirt Trust as a Disregarded Entity
Taxpayers are generally allowed to arrange and conduct their
affairs and structure their transactions to minimize any adverse
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011