-13- activities with Sierra. Instead, he relied on records maintained by Sierra, which were destroyed in the fall of 2004. The Schedule D, Capital Gains and Losses, attached to their 2001 return reported an amount realized of $600,000 from the sale of their Berlin house and a corresponding adjusted basis of $600,000. The Schedule D did not report the sale of the South Point Road lot. The Schedule E, Supplemental Income and Loss, reported a loss from the Boonsboro Partnership of $45,733. On September 19, 2005, respondent issued petitioners a notice of deficiency, disallowing petitioners’ Schedule C expenses and Schedule E loss. Respondent also adjusted petitioners’ income to include a capital gain of $660,371 on the sale of the Berlin house and the South Point Road lot. OPINION A. Burden of Proof Generally the taxpayer bears the burden of proving the Commissioner’s determinations are erroneous. Rule 142(a). However, the burden of proof with respect to a factual issue relevant to the liability of a taxpayer for tax may shift to the Commissioner under section 7491(a) if the taxpayer has produced credible evidence relating to the issue, has met his substantiation requirements, maintained records, and cooperated with the Secretary’s reasonable requests for documents, witnesses, and meetings.Page: Previous 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 NextLast modified: March 27, 2008