- 13 - secs. 1.263(a)-1 and 1.263(a)-2(a), Income Tax Regs. The taxpayer is required to maintain records sufficient to enable the Commissioner to determine his correct tax liability. See sec. 6001; sec. 1.6001-1(a), Income Tax Regs. The taxpayer has the burden to prove the Commissioner’s determination was in error.16 Rule 142(a). At trial, petitioner produced a check payable to VVI for $80,000, dated October 3 or 5, 1995, bearing the notation “asset purchase UG”.17 Mr. Reeves testified that the $80,000 expenditure was initially recorded in petitioner’s books as an “equipment purchase” and was most likely paid to purchase darkroom equipment, plates, small hand tools, paper, and ink. On brief, petitioner indicated that the expenditure was most likely for “miscellaneous equipment that would have gone hand-in-hand with the printing equipment”. Although small hand tools, paper, and ink could fit the description of incidental materials and supplies the costs of which may be deducted currently under section 162, petitioner 16 Petitioner does not argue that sec. 7491(a) operates to shift the burden of proof to respondent. Even if petitioner had so argued, the burden of proof would not shift under sec. 7491(a) because petitioner has not shown it maintained all required records, nor has it shown it cooperated with the reasonable requests of respondent for witnesses, documents, or meetings. 17 UG was the acronym for Universal Graphics. Universal Graphics was the business name for VVI’s printing, advertising, and marketing services before petitioner’s sec. 355 reorganization.Page: Previous 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 NextLast modified: November 10, 2007