- 17 - See Higbee v. Commissioner, 116 T.C. 438, 442 (2001); Bernardo v. Commissioner, T.C. Memo. 2004-199 n.6. Section 7491(a)(1) applies only if the taxpayer complies with any substantiation requirements imposed by the Internal Revenue Code, maintains all required records, and cooperates with the Commissioner for witnesses, information, documents, meetings, and interviews. Sec. 7491(a)(2)(A) and (B). The taxpayer bears the burden of proving compliance with the conditions of section 7491(a)(2)(A) and (B). H. Conf. Rept. 105-599, at 240 (1998), 1998-3 C.B. 747, 994. B. Arguments of the Parties Petitioners argue that the burden of proof with respect to the basis issue shifts to respondent because they complied with all of the conditions of section 7491(a)(2) and presented credible evidence of sufficient bases in Sidal to sustain their passthrough deductions for the audit years. Although respondent concedes that petitioners complied with the record maintenance and cooperation requirements of section 7491(a)(2)(B), he argues that petitioners did not comply with the substantiation requirement of section 7491(a)(2)(A), and that, therefore, the burden of proof on the basis issue remains with petitioners. Respondent also argues that petitioners failed to introduce credible evidence of their bases in Sidal during the audit years.Page: Previous 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 Next
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