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because petitioner failed to substantiate the Schedule C
deductions.
In general, the Commissioner’s determinations set forth in a
notice of deficiency are presumed correct, and the taxpayer bears
the burden of showing that the determinations are erroneous.4
Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933).
However, when the Commissioner relies on a basis or theory at
trial which was not stated or described in the notice of
deficiency, and the new basis or theory requires the presentation
of different evidence, the Commissioner has raised “new matter”,
and the burden of proof falls on him with respect to that new
matter. Rule 142(a); Shea v. Commissioner, 112 T.C. 183, 197
(1999); Wayne Bolt & Nut Co. v. Commissioner, 93 T.C. 500, 507
(1989). In determining whether the Commissioner has given a
taxpayer sufficient notice of his basis for determining a
deficiency, we examine a notice of deficiency in conjunction with
documents provided to a taxpayer or his or her representative
during the examination of a taxpayer’s income tax return. Bitker
v. Commissioner, T.C. Memo. 2003-209.
A. Section 195
Amounts paid or incurred in connection with creating an
4 Petitioner has neither claimed nor shown that he
satisfied the requirements of sec. 7491(a) to shift the burden of
proof to respondent with regard to any factual issue.
Accordingly, petitioner bears the burden of proof. Rule 142(a).
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