- 30 - II. Income Tax Deficiencies - Unreported Income The Internal Revenue Code imposes a Federal tax on the taxable income of every individual. Sec. 1. Section 61(a) defines gross income for purposes of calculating taxable income as “all income from whatever source derived”. Respondent has determined that petitioners were required to include in their gross income, and failed to report on their Forms 1040, the receipts they instead attributed to HGAMC. A. Burden of Proof As a general rule, the Commissioner’s determinations are presumed correct, and the taxpayer bears the burden of proving error therein. Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933). Although section 7491(a) may shift the burden to the Commissioner with respect to factual issues where the taxpayer introduces credible evidence, the provision operates only where the taxpayer establishes that he or she has complied with all substantiation requirements, has maintained all required records, and has cooperated with reasonable requests for witnesses, information, documents, meetings, and interviews. Here, as indicated above, petitioners were not forthcoming during the examination of their returns. Section 7491(a) therefore effects no shift of burden in the instant cases. However, an additional limitation on the general rule potentially bears upon the cases at bar. Various Courts ofPage: Previous 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 Next
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