Gary W. McDonough - Page 14

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          amounts that should have been assessed as deficiencies related              
          thereto, to reflect his recent finding that the aforementioned              
          decisions increased petitioner’s income in the respective years             
          only by $28,059 and $100,226.5  On October 25, 2004, respondent             
          abated $1,369 and $23 of the assessed computational adjustments             
          for 1989 and 1991, respectively, thus reducing the assessed                 
          amounts to $7,574 and $28,324, respectively.  Those reductions              
          led to respondent’s allegation in the answer that the accuracy-             
          related penalties for 1989 and 1991 equal $3,029.60 and                     
          $5,664.80, respectively ($7,574 x .40 = $3,029.60; $28,324 x .20            
          = $5,664.80).                                                               
          1.  Burden of Production                                                    
               Petitioner argues that section 7491(c) applies to place upon           
          respondent the burden of production as to the accuracy-related              
          penalties.6  Section 7491(c) was added to the Code by the                   

               5 The letters also explained that respondent was reducing              
          petitioner’s self-employment tax for 1991 to reflect a correction           
          made in the calculation of self-employment income.                          
               6 Sec. 7491(c) provides:                                               
                    SEC. 7491(c).  Penalties.--Notwithstanding any                    
               other provision of this title, the Secretary shall have                
               the burden of production in any court proceeding with                  
               respect to the liability of any individual for any                     
               penalty, addition to tax, or additional amount imposed                 
               by this title.                                                         
          In order for the Commissioner to satisfy that burden of                     

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