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respectively, and additions to tax under sections 6651(a)(1)1 and
6654 as follows:2
Taxable Year Ended Sec. 6651(a)(1) Sec. 6654
9/30/98 $2,469.60 $537.91
9/30/99 1,121.40 238.04
The issues for decision are: (1) Whether the income and
expenses of a business conducted under the names of Omnitec
1All section references are to the Internal Revenue Code as
amended and in effect for the years at issue. All Rule
references are to the Tax Court Rules of Practice and Procedure.
The petition was filed pursuant to sec. 7463 as a small tax case.
Prior to trial, petitioner moved to have the case considered
under sec. 7443A(b)(3). Petitioner’s motion was granted. In the
notice of deficiency, respondent determined the addition to tax
under sec. 6651(a)(2) but conceded that adjustment at trial.
Counsel for respondent also advised the Court that the notice of
deficiency determined an addition to tax under sec. 6654, and
that, instead, the determination was under sec. 6655, failure of
a corporation to pay estimated income taxes.
2Under sec. 7491(a)(1), with respect to audits commencing
after July 22, 1998, the burden of proof shifts to respondent
where the taxpayer introduces credible evidence with respect to
any factual issue relevant to ascertaining the tax liability.
The burden of proof, however, does not shift where the taxpayer
fails to comply with requirements for substantiation of any item,
has not maintained books and records with respect to any activity
in question, and fails to cooperate with reasonable requests for
witnesses, information, documents, meetings, and interviews.
Sec. 7491(a)(2). In this case, petitioner failed on several
fronts in complying with basic and fundamental requirements, such
as maintaining books and records and providing such records to
respondent in connection with the audit, which required
respondent to resort to an indirect method of determining income.
The burden of proof, therefore, has not shifted to respondent
under sec. 7491(a); however, under sec. 7491(c), relating to
penalties and additions to tax, the burden of production is on
respondent.
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