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B. Burden of Proof
The Commissioner has the burden of production with respect
to the accuracy-related penalty. Sec. 7491(c). To meet this
burden, the Commissioner must produce sufficient evidence
indicating that it is appropriate to impose the penalty. See
Higbee v. Commissioner, 116 T.C. 438, 446 (2001). Once the
Commissioner meets this burden of production, the taxpayer must
come forward with persuasive evidence that the Commissioner’s
determination is incorrect. Rule 142(a); see Higbee v.
Commissioner, supra. The taxpayer may meet this burden by
proving that he or she acted with reasonable cause and in good
faith. See sec. 6664(c)(1); see also Higbee v. Commissioner,
supra; sec. 1.6664-4(b)(1), Income Tax Regs.
C. Analysis
In the matter before us, respondent has met his burden of
production under section 7491(c). The record shows that both
petitioner’s 2001 and 2002 income tax returns contain
understatements of tax greater than $5,000. See sec.
6662(d)(1)(A)(ii). Accordingly, petitioner bears the burden of
proving that the accuracy-related penalties should not be imposed
with respect to any portion of the understatements for which he
acted with reasonable cause and in good faith. See sec.
6664(c)(1); Higbee v. Commissioner, supra at 446.
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