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petitioners’ total 1997 net loss over the net loss reported on
the third amended return.
OPINION
I. Burden of Proof
Petitioners argue that, pursuant to section 7491(a), the
burden of proof “has shifted to” respondent with respect to all
of the factual issues. Petitioners further argue that respondent
conceded at trial that he bears the burden of proof on all issues
except the LIFO/FIFO basis issue, and that respondent bears the
burden of proof on that issue as well because petitioners have
“met the preconditions of Section 7491 on * * * [that] issue.”
Generally, a taxpayer in this court bears the burden of
proof. Rule 142(a)(1). In certain circumstances, however, if
the taxpayer introduces credible evidence with respect to any
factual issue relevant to ascertaining the proper tax liability,
section 7491 shifts the burden of proof to the Commissioner.
Sec. 7491(a)(1); Rule 142(a)(2). Credible evidence is evidence
the court would find sufficient upon which to base a decision on
the issue in favor of the taxpayer if no contrary evidence were
submitted. See Higbee v. Commissioner, 116 T.C. 438, 442 (2001);
Bernardo v. Commissioner, T.C. Memo. 2004-199 n.6. Section
7491(a)(2) imposes certain prerequisites to the application of
section 7491(a)(1), including that the taxpayer must have
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