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In that schedule, petitioners claimed, inter alia, a deduction of
$8,216 for expenses for “Employee benefit programs”.
Respondent issued to petitioners a notice of deficiency
(notice) for their taxable year 2001. In that notice, respondent
determined to disallow the $8,216 deduction that petitioners
claimed in petitioners’ 2001 Schedule F for “Employee benefit
programs” because “it has not been established that the deduction
claimed qualifies as an ordinary and necessary business expense”.
In the notice that respondent issued to petitioners for their
taxable year 2001, respondent also determined to allow petition-
ers a “Self-Employed Health Insurance Deduction” of $2,151
because “You are allowed an additional deduction for Self-Em-
ployed Health Insurance.”
OPINION
The parties submitted this case fully stipulated under Rule
122. That the parties submitted this case under that Rule does
not affect who has the burden of proof or the effect of a failure
of proof. Rule 122(b); Borchers v. Commissioner, 95 T.C. 82, 91
(1990), affd. 943 F.2d 22 (8th Cir. 1991).
The parties disagree over whether the burden of proof in
this case shifts to respondent under section 7491(a). In order
for the burden of proof to shift to the Commissioner of Internal
Revenue under that section, the taxpayer must (1) provide credi-
ble evidence with respect to any factual issue relevant to
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Last modified: November 10, 2007