-11-
erroneous.6 Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115
(1933). Unreported income from wagering activities involves a
special rule, however. The Commissioner must first present some
evidence connecting the taxpayer with a wagering activity during
the years at issue to obtain the benefit of the presumption of
correctness. DiMauro v. United States, supra at 884; De
Cavalcante v. Commissioner, 620 F.2d 23, 27-28 (3d Cir. 1980),
affg. Barrasso v. Commissioner, T.C. Memo. 1978-432; Pizzarello
v. United States, 408 F.2d 579, 583 (2d Cir. 1969). Once the
Commissioner has met this minimal evidentiary foundation, the
burden then shifts to the taxpayer to prove the Commissioner’s
determination was incorrect. DiMauro v. United States, supra at
884.
Mr. Paterson stipulated that he operated a professional
bookmaking and wagering business during the years at issue.
Sufficient evidence therefore exists to connect Mr. Paterson with
a wagering activity during the years at issue. The burden is
thus on petitioners to prove that respondent’s determination was
incorrect.
We have previously approved the profit factor method as a
reasonable method to determine income from bookmaking activities.
Robinson v. Commissioner, T.C. Memo. 1986-382. Revenue Agent
Johnson applied the profit factor method as described in Robinson
6This principle is not affected by sec. 7491(a) because
neither petitioner cooperated with respondent’s reasonable
requests during respondent’s examinations. See sec.
7491(a)(2)(B). Accordingly, the burden of proof remains with
petitioners.
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