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the taxpayer. In certain circumstances, however, if the taxpayer
introduces credible evidence with respect to any factual issue
relevant to ascertaining the proper tax liability, section 7491
shifts the burden of proof to the Commissioner. Sec. 7491(a)(1);
Rule 142(a)(2). Petitioner did not argue that section 7491 is
applicable, and he did not establish that the burden of proof
should shift to respondent. Petitioner, therefore, bears the
burden of proving that respondent’s determination in the notice
of deficiency is erroneous. See Rule 142(a); Welch v. Helvering,
supra at 115. With respect to any penalty or addition to tax,
however, section 7491(c) places the burden of production on the
Commissioner.
With respect to the first issue involved in this case,
section 72(t) imposes an additional tax on distributions from a
QRP equal to 10 percent of the portion of such amount that is
includable in gross income unless the distribution comes within
one of several exceptions. For purposes of the 10-percent
additional tax, a QRP includes both a section 401(k) pension plan
and an individual retirement account. See secs. 72(t)(1),
401(a), (k)(1), 4974(c)(1), (4), (5).
Section 72(t)(2) enumerates the exceptions to the 10-percent
additional tax for early distributions from QRPs. There is no
economic hardship exception to the 10-percent additional tax
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Last modified: March 27, 2008