- 19 -
OPINION
As a general rule, with respect to the amount of the
deficiency in issue, the taxpayer bears the burden of proof.
Rule 142(a); INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84
(1992); Rockwell v. Commissioner, 512 F.2d 882, 886 (9th Cir.
1975), affg. T.C. Memo. 1972-133. That burden may shift to
respondent if the taxpayer introduces credible evidence with
respect to any factual issue relevant to ascertaining the
taxpayer’s tax liability. Sec. 7491(a)(1). However, section
7491(a)(1) applies with respect to an issue only if the taxpayer
has complied with the requirements under the Code to substantiate
any item, has maintained all records required by the Code, and
has cooperated with reasonable requests by the Commissioner for
witnesses, information, documents, meetings, and interviews.
Sec. 7491(a)(2)(A) and (B). For the reasons discussed below,
petitioners’ evidence is unreliable, and their claims are
unsubstantiated. They have not satisfied the conditions for
shifting the burden of proof to respondent. As discussed below,
however, respondent has the burden of proving fraud by clear and
convincing evidence.
Unreported Taxable Income
Gross income is defined in section 61 as all income from
whatever source derived, including, but not limited to, income
derived from business. Sec. 61(a). Generally, in determining
Page: Previous 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 Next
Last modified: November 10, 2007