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Shortly before trial, petitioner provided respondent’s
counsel with a Form 1040, the Form 1099 from Lauren’s Cycle
Sales, Inc., and a Schedule C, Profit or Loss From Business, on
which petitioner claimed $19,525 in expenses.3 The Form 1040 is
dated November 1, 2005, and purports to be a joint return. The
Form 1040 bears the signature of a return preparer but is not
signed by petitioner or his spouse.
Discussion
As a general rule, the Commissioner’s determinations in the
notice of deficiency are presumed correct, and the taxpayer bears
the burden of proving an error. Rule 142(a); Welch v. Helvering,
290 U.S. 111, 115 (1933). The Commissioner has the burden of
production regarding whether it is appropriate to impose
penalties, additions to tax, or additional amounts. Sec.
7491(c); Higbee v. Commissioner, 116 T.C. 438, 446 (2001). The
Commissioner, however, does not have the obligation to introduce
evidence regarding reasonable cause. Higbee v. Commissioner,
3Petitioner claimed $6,000 for advertising expenses, $7,316
for car and truck expenses, and $6,209 for depreciation and sec.
179 expenses. Line 31 of petitioner’s Schedule C reflects a net
profit of $17,339 after deducting expenses of $19,525 from
petitioner’s $36,864 income.
The Form 1040 that petitioner gave to respondent’s counsel
shortly before trial purports to be a joint Federal income tax
return and lists three personal exemptions, one each for
petitioner, his spouse, and their son. After claiming several
other deductions and credits, petitioner claims that his total
tax liability for taxable year 2000 is only $646.
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