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timely mailed the notice of deficiency within 6 years of the date
petitioner filed his 1985 tax return.
C. Whether Respondent’s Determination of Petitioner’s Income
Tax Deficiency for 1985 Is Correct
Respondent determined that petitioner failed to report
taxable income in the amount of $1,376,353 for 1985 and that he
has a deficiency in tax in the amount of $673,145 for 1985.
Respondent’s determination of petitioner’s deficiency is presumed
to be correct, and petitioner bears the burden of proving
otherwise. See Rule 142(a)(1); Welch v. Helvering, 290 U.S. 111
(1933).4
Before relying on this presumption, the Commissioner must
introduce evidence linking the taxpayer to an income-producing
activity. Weimerskirch v. Commissioner, 596 F.2d 358, 361, 362
(9th Cir. 1979), revg. 67 T.C. 672 (1977). Respondent has done
this. Petitioner conducted transactions that led to the deposits
of large amounts of money into his personal accounts, and, as
discussed above, petitioner is collaterally estopped from denying
that he received some income from those deposits.
4 Petitioner does not contend that respondent’s
determination is arbitrary. See Helvering v. Taylor, 293 U.S.
507 (1935).
The parties do not discuss the burden of proof. Because the
notice of deficiency was issued in 1994, i.e., before July 22,
1998, sec. 7491 does not apply. See Internal Revenue Service
Restructuring and Reform Act of 1998, Pub. L. 105-206, sec.
3001(a), 112 Stat. 726.
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