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and (B) to substantiate items, maintain records, and cooperate
fully with respondent’s reasonable requests.
Respondent claims that petitioners cooperated only partially
and that petitioners produced only some of the documentary
evidence they possess. At trial, petitioners admitted that they
had not searched every location where relevant documents were
likely stored. We agree with respondent that petitioners have
not fully satisfied the requirements of section 7491(a)(2)(A) and
(B), and, therefore, petitioners bear the burden of proof.
II. Trust Distribution
Petitioners received $170,000 or more in distributions from
the trust following Mr. Purcell’s death. Petitioners acknowledge
receipt of funds from the trust but assert that they were not
provided sufficient information to determine whether the
distributions constituted gross income. The distributions from
the trust included but were not limited to the proceeds from Mr.
Purcell’s life insurance policy, from the sale of his home, from
the liquidation of his brokerage account, and from a liquidating
distribution from his Roth IRA account.
In an August 2003 letter to the Purcell sisters, Mr.
Purcell’s estate planning attorney explained: “Other than IRA,
401k [sic], bond interest, and final pay, the amounts you inherit
are income tax free.” The attorney informed the Purcell sisters
that the section 401(k) plan maintained by Mr. Purcell’s employer
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