Peter F. & Maureen L. Speltz - Page 11

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               Respondent makes a number of alternative arguments to                  
          disallow the deductions and exclusions.  Respondent argues that             
          petitioners’ section 105(b) plan was improper and/or failed on              
          its own terms, that Mr. Speltz was not a bona fide employee of              
          the daycare, and that the expenses were not ordinary and                    
          necessary business expenses.  Petitioners counter that the                  
          medical premiums and reimbursements should be excluded from Mr.             
          Speltz’s gross income because petitioners set up a proper section           
          105(b) plan for daycare employees and that Mr. Speltz was a bona            
          fide employee.  Petitioners also contend that the medical                   
          premiums and reimbursements are deductible from the daycare                 
          business income because they were ordinary and necessary business           
          expenses of the daycare.  We first address the burden of proof.             
          I.   Burden of Proof                                                        
               The Commissioner’s determinations are presumptively correct,           
          and the taxpayers bear the burden of proving that the                       
          Commissioner’s determinations are erroneous.  Rule 142(a); see              
          Welch v. Helvering, 290 U.S. 111, 115 (1933).  Taxpayers also               
          bear the burden of proving that they are entitled to the claimed            
          deductions.  INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84                 
          (1992); New Colonial Ice Co. v. Helvering, 292 U.S. 435, 440                
               A taxpayer’s burden, however, may shift to the Commissioner            
          if the taxpayer introduces “credible evidence” complete with the            

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