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Internal Revenue Service Restructuring and Reform Act of 1998,
Pub. L. 105-206, sec. 3001(a), 112 Stat. 726. The amendment is
effective for “court proceedings arising in connection with
examinations commencing after” July 22, 1998. Id. sec.
3001(c)(1), 112 Stat. 727. While the parties agree that
respondent started examining TBS 89-1 before the effective date
of section 7491(c), the parties dispute whether respondent’s
examination of TBS 89-1 is the relevant examination for purposes
of establishing the date on which respondent started his
examination as to the affected items at issue. According to
respondent, the affected items were determined “in connection
with” the examination of TBS 89-1 and, hence, the date on which
that examination began is the date that is used to test whether
section 7491(c) applies to this case. According to petitioner,
respondent’s determination of the affected items resulted from a
separate, non-partnership-level examination of petitioner
personally and, hence, the starting date of the later examination
is the date to be used to determine the applicability of section
7491(c). Notwithstanding which party bears the burden of
6(...continued)
production, the record must establish that it is appropriate to
impose the relevant penalty, addition to tax, or additional
amount. See Higbee v. Commissioner, 116 T.C. 438, 446 (2001).
The burden of production and proof remain on the taxpayer to
establish that the penalty, addition to tax, or additional amount
does not apply because of reasonable cause, substantial
authority, or the like. Id.; see also H. Conf. Rept. 105-599, at
241 (1998), 1998-3 C.B. 747, 995.
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Last modified: November 10, 2007