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Respondent issued a notice of deficiency on November 8,
2004, for the taxable year 2002, and on May 23, 2005, for the
taxable year 2003, showing deficiencies of $851 and $893,
respectively. In response to each notice of deficiency,
petitioners filed a petition with this Court in a timely manner.
These cases were consolidated for trial and briefing, and a trial
was held on February 7, 2006, in El Paso, Texas.
Discussion
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 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). Here, the parties
agree on the facts. The sole issue for decision is a legal
issue, and, therefore, section 7491 does not affect the result in
these cases.
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Last modified: November 10, 2007