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complied with the requirements under the Internal Revenue Code
“to substantiate any item”. Sec. 7491(a)(2)(A).
At trial, respondent conceded that “the preconditions set
forth in section 2 [section 7491(a)(2)] have been met, with the
exception of the fact that the taxpayer has not * * * maintained
or provided records necessary for the identification of the sale
of the stock pertaining to the LIFO/FIFO issue.” That is not a
concession by respondent that he bears the burden of proof on all
issues except the LIFO/FIFO basis issue. It is merely a
concession that petitioners have satisfied the section 7491(a)(2)
prerequisites to the application of section 7491(a)(1) to those
issues. Respondent argues that petitioners retain the burden of
proof on all issues because they have failed to present “credible
evidence” in support of their position on each issue as required
by section 7491(a)(1).
As discussed infra, petitioners have failed to introduce
credible evidence that: (1) They are not taxable on the sale of
634,100 shares of Solv-Ex common stock pledged to Merrill Lynch;
(2) they may determine Mr. Rendall’s basis in those shares under
the LIFO method for determining cost basis; and (3) the $2
million loan and Mr. Rendall’s Solv-Ex common stock became
worthless in 1997. Therefore, petitioners retain the burden of
proof with respect to those issues pursuant to Rule 142(a), a
burden that, because of the absence of credible evidence,
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