Robert K. and Cheryl Hardwick - Page 9

                                        - 9 -                                         
          INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84 (1992); sec.                 
          1.6001-1(a), Income Tax Regs.  As a general rule, the                       
          Commissioner’s determination of a taxpayer’s liability in the               
          notice of deficiency is presumed correct, and the taxpayer bears            
          the burden of proving that the determination is improper.  See              
          Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933).                  
          However, pursuant to section 7491(a)(1), the burden of proof on             
          factual issues that affect the taxpayer’s tax liability may be              
          shifted to the Commissioner where the “taxpayer introduces                  
          credible evidence with respect to * * * such [factual] issue”.              
          The burden will shift only if the taxpayer has, inter alia,                 
          complied with substantiation requirements pursuant to the                   
          Internal Revenue Code and “cooperated with reasonable requests by           
          the Secretary for witnesses, information, documents, meetings,              
          and interviews”.  Sec. 7491(a)(2).  Petitioners did not comply              
          with the substantiation requirements, and failed to present                 
          credible evidence at trial.  Accordingly, the burden remains on             
          II. Gambling                                                                
               Gross income includes all income from whatever source                  
          derived, including gambling.  See sec. 61; McClanahan v. United             
          States, 292 F.2d 630, 631-632 (5th Cir. 1961).  In the case of a            
          taxpayer not engaged in the trade or business of gambling,                  
          gambling losses are allowable as an itemized deduction, but only            

Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  Next 

Last modified: March 27, 2008