Janet A. Phillips - Page 5




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          burden of proof to the Commissioner in specified circumstances,             
          petitioner did not satisfy the prerequisites under section                  
          7491(a)(1) and (2) for such a shift.                                        
               In unreported income cases, the Commissioner in some                   
          circumstances has been required to show a minimal evidentiary               
          foundation for the determined deficiencies, which may consist of            
          evidence linking the taxpayer to an income-producing activity.              
          See Williams v. Commissioner, 999 F.2d 760, 763-764 (4th Cir.               
          1993), affg. T.C. Memo. 1992-153.  If the Commissioner introduces           
          some evidence that the taxpayer received unreported income, then            
          the burden shifts to the taxpayer to show by a preponderance of             
          the evidence that the deficiency was arbitrary or erroneous.                
          Hardy v. Commissioner, 181 F.3d 1002, 1004 (9th Cir. 1999), affg.           
          T.C. Memo. 1997-97.                                                         
               Section 61(a) specifies that, “Except as otherwise                     
          provided”, gross income includes “all income from whatever source           
          derived”.  Wages and dividends are both listed among the forms of           
          income within the definition of section 61(a).  Sec. 61(a)(1),              
          (7).6                                                                       
               Respondent has shown an evidentiary foundation with respect            
          to the $52,327.73 in unreported wage income and $430 in                     
          unreported dividend income determined in the attachment to the              
          notice of deficiency.  In that regard, the parties have                     

               6 Wages are referred to in sec. 61(a)(1) as “Compensation              
          for services”.                                                              





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