- 18 - C. Analysis 1. The Paulan Direct Payments For reasons discussed infra, we agree with respondent that petitioners have failed to introduce credible evidence that the Paulan direct payments provided them with bases in Sidal during the audit years. Therefore, it is unnecessary to address the issue of petitioners’ compliance with the requirement of section 7491(a)(2)(A) “to substantiate any item” as it may apply to those payments. Because we find that petitioners have failed to introduce credible evidence that the Paulan direct payments provided petitioners with basis in Sidal, we decide the basis issue as it relates to those payments in respondent’s favor; i.e., the absence of credible evidence that petitioners acquired bases in Sidal by virtue of the Paulan direct payments necessarily means that petitioners cannot sustain their resulting burden of proof with respect to those payments. See Bernardo v. Commissioner, supra n.7. 2. The Wire Transfer Payments Because we base our decision (discussed infra) regarding petitioners’ bases in Sidal attributable to the wire transfer payments upon a preponderance of the evidence, assignment of the burden of proof under section 7491 is unnecessary. See FRGC Inv., LLC v. Commissioner, T.C. Memo. 2002-276, affd. on thisPage: Previous 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 Next
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