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determining the tax liability of the taxpayer and (2) comply with
the applicable requirements of section 7491(a)(2). Although
section 7491(a) does not define the term “credible evidence”, the
legislative history of the statute does. The legislative history
of section 7491(a) provides in pertinent part:
Credible evidence is the quality of evidence which,
after critical analysis, the court would find suffi-
cient upon which to base a decision on the issue if no
contrary evidence were submitted (without regard to the
judicial presumption of IRS correctness). * * * The
introduction of evidence will not meet this standard if
the court is not convinced that it is worthy of belief.
* * *
H. Conf. Rept. 105-599, at 240-241 (1998), 1998-3 C.B. 747, 994-
995.
As discussed below, there are factual issues relevant to
determining the tax liability of petitioners for the year at
issue as to which petitioners have not introduced credible
evidence within the meaning of section 7491(a)(1) and as to which
the burden of proof does not shift to respondent under that
section.
We turn now to whether petitioners are entitled to deduct
under section 162(a) the $8,216 for “Employee benefit programs”
claimed in petitioners’ Schedule F. A taxpayer, including the
owner of an unincorporated business like Mr. Albers, is entitled
to deduct all the ordinary and necessary expenses paid or in-
curred during the taxable year in carrying on a trade or busi-
ness, sec. 162(a), including any amount paid to an employee
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