Hector Prowse - Page 5

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               Some of the facts and exhibits were stipulated, and those              
          facts are so found.  At the time the petition was filed,                    
          petitioner was a legal resident of Middle Village, New York.4               
               From May 21, 2001, until January 11, 2002, petitioner was              
          employed as a mechanical HVAC engineer for KeySpan Engineering              
          Associates (KeySpan Associates).  In that capacity, petitioner              
          worked on several design projects in the office.  After                     
          petitioner left KeySpan Associates on January 11, 2002,                     

          164(f).  A witness from the payor testified at trial regarding              
          this payment, and the Court is satisfied that respondent                    
          correctly determined the payment to be self-employment income,              
          which petitioner reported on his return.  Petitioner, however,              
          presented no evidence challenging the determination that                    
          petitioner is liable for self-employment tax on the distribution;           
          consequently, the Court deems that issue as conceded.                       
               4 Sec. 7491(a) generally shifts the burden of proof to the             
          Commissioner with regard to any factual issue relevant to                   
          ascertaining the taxpayer’s liability.  Sec. 7491(a)(2) limits              
          this rule only with respect to issues to which the taxpayer has             
          complied with the requirements for substantiation of any item,              
          has maintained all records with respect to such items, and has              
          cooperated with reasonable requests by the Secretary for                    
          witnesses, information, documents, and interviews, etc.,                    
          regarding the matters at issue.  Since petitioner did not                   
          cooperate with respondent in providing records to substantiate              
          the items on his return, the burden of proof does not shift.                
          However, as to fraud under sec. 6663(a), sec. 6663(b) provides              
          that, with respect to any portion of an underpayment that is                
          attributable to fraud, the entire underpayment is treated as                
          attributable to fraud except for any portion of the underpayment            
          that the taxpayer establishes is not attributable to fraud.  Sec.           
          7454(a) provides that, in any proceeding involving fraud, the               
          burden of proof as to such issue is upon the Secretary.  Thus,              
          the burden of proof on the fraud issue in this case is on                   

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