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as an accountant. Sec. 1.6664-4(b)(1), Income Tax Regs.
Before turning to petitioners’ position under section 6662,
we shall address section 7491(c). Although respondent must have
commenced respondent’s examination of petitioners’ return for the
year at issue after July 22, 1998, the parties do not address
section 7491(c). Respondent has the burden of production under
that section with respect to the accuracy-related penalty under
section 6662(a). To meet that burden, respondent must come
forward with sufficient evidence showing that it is appropriate
to impose the accuracy-related penalty. Higbee v. Commissioner,
116 T.C. 438, 446 (2001). Although respondent bears the burden
of production with respect to the accuracy-related penalty that
respondent determined for petitioners’ taxable year 2001, respon-
dent “need not introduce evidence regarding reasonable cause,
substantial authority, or similar provisions. * * * the taxpayer
bears the burden of proof with regard to those issues.” Id.
Old section 931 permitted citizens of the United States to
exclude income derived from sources within possessions of the
United States, except Puerto Rico, the U.S. Virgin Islands, and
Guam, if certain conditions were satisfied. Although old section
931 did not define the term “possession of the United States”,
section 1.931-1, Income Tax Regs., promulgated under old section
931 provided that the term “possession of the United States”
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