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As a general rule, a taxpayer bears the burden of proving the
Commissioner’s determinations in a notice of deficiency to be in
error. Rule 142(a).2 Certain courts have recognized a limited
exception to the general rule where the notice of deficiency
determines that the taxpayer failed to report income. Llorente v.
Commissioner, 649 F.2d 152, 156 (2d Cir. 1981), affg. in part and
revg. in part 74 T.C. 260 (1980); Weimerskirch v. Commissioner,
596 F.2d 358 (9th Cir. 1979), revg. 67 T.C. 672 (1977). In such
circumstances, the Commissioner must come forward with evidence
establishing a minimal foundation, which may consist of evidence
linking the taxpayer with an income-producing activity. Petzoldt
v. Commissioner, supra at 689. In the present case, petitioner
does not dispute that he received income with respect to the
relevant business activities.
Petitioner argues that respondent’s determination concerning
the receipt of unreported income is in error. To this effect,
petitioner argues that he
received a certain amount of money as compensation for my
services. I acknowledged that, and that was reported. There
are additional amounts that were third party expenses that
had nothing to do with me for which I was nonetheless
responsible. There were a number of deposits that were made
from one account to another, primarily because the expenses,
2Sec. 7491(a), which shifts the burden of proof to the
Commissioner under certain circumstances, does not apply with
respect to any factual dispute in this case because petitioner
did not keep adequate books and records and did not meet
statutory substantiation requirements. Sec. 7491(a)(2)(A) and
(B).
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Last modified: May 25, 2011