Mark N. Wright and Erica Y. Wright - Page 17

                                       - 17 -                                         
          are a matter of legislative grace, and the taxpayer bears the               
          burden of proving that he is entitled to any claimed deductions.            
          New Colonial Ice Co. v. Helvering, 292 U.S. 435, 440 (1934).                
               However, pursuant to section 7491(a), the burden of proof on           
          any factual issue that affects 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).  In the instant case, petitioners did not                  
          present any credible evidence at trial.  Notably, the Court did             
          not find Mr. Wright’s testimony to be credible, as he often                 
          provided inconsistent and implausible answers.  In addition,                
          petitioners did not comply with the substantiation requirements             
          and failed to provide respondent with requested documents.19                
          Accordingly, section 7491(a) is inapplicable, and the burden                

               19Respondent sent Wright & Associates Form 4564, Information           
          Document Request, on July 9 and Dec. 16, 2002, and Jan. 9, 2003,            
          to which petitioners failed to respond fully and properly.                  
          Respondent then formally repeated the three requests by issuing             
          Formal Document Requests with a letter explaining the matter on             
          Dec. 5 and 19, 2002, and Jan. 27, 2003.  Subsequently, during               
          discovery, petitioners failed to respond to respondent’s                    
          interrogatories and request for production of documents, and                
          provided incomplete responses after the Court granted                       
          respondent’s motions to compel.  See infra note 20.                         

Page:  Previous  7  8  9  10  11  12  13  14  15  16  17  18  19  20  21  22  23  24  25  26  Next

Last modified: May 25, 2011