- 3 - petitioners. The Form 1099-C reported August 28, 2001, as the date of the cancellation of debt and $6,583.34 as the amount of debt canceled. Petitioners were not insolvent in 2001, nor did they file for bankruptcy during that year. Petitioners timely filed their Form 1040, U.S. Individual Income Tax Return, for the taxable year 2001. Petitioners did not report any part of the cancellation of indebtedness on their 2001 tax return. Subsequently, respondent determined that petitioners failed to report on their tax return for 2001 income from discharge of indebtedness of $6,583. Accordingly, respondent issued to petitioners a notice of deficiency determining a deficiency of $865 in petitioners’ 2001 Federal income tax. Discussion As a general rule, the determinations of the Commissioner in a notice of deficiency are presumed correct, and the taxpayer bears the burden of proving the Commissioner’s determinations in the notice of deficiency to be in error. Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933). As one exception to this rule, section 7491(a) places upon the Commissioner the burden of proof with respect to any factual issue relating to liability for tax if the taxpayer maintained adequate records, satisfied the substantiation requirements, cooperated with the Commissioner,Page: Previous 1 2 3 4 5 6 7 8 9 Next
Last modified: May 25, 2011