Joseph D. & Elizabeth M. Dunne - Page 2

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          6651(a)(1)1 of $205,028.25 and $592.50, respectively, for 1997              
          and 1999.  After concessions,2 the issues for decision are:                 
               (1)  Whether respondent bears the burden of proof under                
          section 7491(a).  We hold that respondent does not;                         
               (2)  whether petitioner Joseph Dunne was a shareholder of              
          FRC International, Inc. (FRC), in 1997 and whether petitioners              
          must pay income tax on FRC’s income under section 1366.  We hold            
          that Mr. Dunne ceased to be a shareholder of FRC on May 8, 1997,            
          and therefore under section 1377(a)(1) petitioners are liable for           
          paying income tax only on Mr. Dunne’s pro rata share of FRC’s               
          income on the basis of the number of days in 1997 that he owned             
          the stock;                                                                  
               (3)  whether Mrs. Dunne is eligible for relief from joint              
          liability under section 6015 for 1997.  We hold that she is not;            
               (4)  whether petitioners may claim as trade or business                
          expenses $20,000 of legal expenses that they incurred in 1999.              
          We hold that they may not, but they may claim the $20,000 as                
          miscellaneous itemized expenses;                                            

               1 All section references are to the Internal Revenue Code              
          (the Code) in effect for the years in issue, and all Rule                   
          references are to the Tax Court Rules of Practice and Procedure.            
               2 Petitioners concede that the statute of limitations does             
          not bar the assessment or collection of any amount due for 1997             
          or 1999.  Petitioners also concede that petitioner Elizabeth                
          Dunne does not qualify for innocent spouse relief under sec. 6015           
          for 1999.                                                                   

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