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B. Burden of Proof
As a general rule, the Commissioner’s determinations are
presumed correct, and the taxpayer bears the burden of proving
error therein. Rule 142(a); Welch v. Helvering, 290 U.S. 111,
115 (1933). Additionally, taxpayers are required to maintain
records sufficient to establish the existence and amount of all
items reported on the tax return, including both income and
offsets or deductions therefrom. Sec. 6001; Hradesky v.
Commissioner, 65 T.C. 87, 89-90 (1975), affd. 540 F.2d 821 (5th
Cir. 1976); sec. 1.6001-1(a), Income Tax Regs. Deductions in
particular are a matter of “legislative grace”, and “a taxpayer
seeking a deduction must be able to point to an applicable
statute and show that he comes within its terms.” New Colonial
Ice Co. v. Helvering, 292 U.S. 435, 440 (1934); see also Rule
142(a).
There exist, however, several exceptions that may modify the
foregoing general rule. One is section 7491, with principles
relevant to deficiency determinations set forth in subsection (a)
and rules governing penalties and additions to tax addressed in
subsection (c).
Section 7491(a)(1) may shift the burden to the Commissioner
with respect to factual issues affecting liability for tax where
the taxpayer introduces credible evidence, but the provision
operates only where the taxpayer establishes that he or she has
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Last modified: November 10, 2007