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2003. The depreciation deductions alone exceed the amounts
petitioners could deduct using the standard mileage rate.
The deductions computed under the standard mileage rate are
in lieu of separate deductions for depreciation and actual
operating costs. Since petitioners are allowed a greater
deduction for actual costs, they are not allowed a deduction for
transportation costs using the standard mileage rate. See, e.g.,
Tesar v. Commissioner, T.C. Memo. 1997-207; Velinsky v.
Commissioner, T.C. Memo. 1996-180.
In addition to the allowable deduction of $7,000 for
depreciation of the truck for each year in issue, petitioners are
entitled to deduct fuel expenses of $303.75 for 2001, $168.22 for
2002, and $264.84 for 2003.
D. Accuracy-Related Penalties
Respondent determined accuracy-related penalties against
petitioners under section 6662(a) for the years in issue.
Section 7491(c) places on the Commissioner the “burden of
production” with respect to a taxpayer’s liability for any
penalty, addition to tax, or additional amount (collectively,
penalty). In order to satisfy the burden of production under
section 7491(c), the Commissioner must produce evidence that it
is appropriate to impose the relevant penalty. Higbee v.
Commissioner, 116 T.C. 438, 446 (2001). Once the Commissioner
has met this burden, the taxpayer must come forward with
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