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lease of vehicle; (2) $4,000 of the claimed $6,000 rental
deduction; and (3) the full amount of the $4,742 claimed interest
deduction.
After the notice of deficiency was issued and a petition was
filed, respondent concluded that the notice did not accurately
reflect the correct adjustments. Apparently some confusion was
created by the return, since petitioner listed other property on
Schedule E, Supplemental Income and Loss, and also incorrectly
reported the purchase of a “warehouse” on Form 8824. In his
answer respondent claimed that the realized gain on the sale of
the San Diego condominium was composed of a capital gain of
$91,424 and an ordinary gain of $20,291. The total of these two
amounts, $111,715, was reported on the 2001 return as realized,
but deferred gain. This claimed adjustment results in a $7,926
increase in the deficiency. Petitioner agrees to the correctness
of this revised computation but nevertheless argues that the gain
should be deferred or that she is entitled to a theft or casualty
loss.
Discussion
I. Burden of Proof
Generally, the burden of proof is on the taxpayer. Rule
142(a)(1). Under section 7491, the burden of proof shifts from
the taxpayer to the Commissioner if the taxpayer produces
credible evidence with respect to any factual issue relevant to
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