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petitioners’ funds. Respondent believed, however, that the funds
came from a taxable source.
Respondent reconstructed petitioners’ incomes using the cash
expenditures method and determined unreported income relating to
the years in issue of $7,502,253 for John Park, $830,321 for
Joseph and Mi Jung Park, and $1,310,895 for David and Deborah
Park. Respondent also determined that John Park had $10,155 of
unreported income from concert promotion activities, and that all
petitioners were liable for section 6651(a) additions to tax for
failure to timely file and section 6662(a) accuracy-related
penalties.
OPINION
Gross income includes all income from whatever source
derived. Sec. 61. Respondent’s determination is generally
presumed correct, and petitioners have the burden of proof.3
Welch v. Helvering, 290 U.S. 111, 115 (1933).
Petitioners contend that respondent’s determinations
relating to unreported income are arbitrary and not entitled to a
presumption of correctness. We disagree. Connecting petitioners
to the funds that form the basis of the deficiency is sufficient
to give petitioners the burden of proving the determination
erroneous. Schad v. Commissioner, 87 T.C. 609, 620 (1986), affd.
3 Sec. 7491 is not applicable to this case.
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