Laurel Ann Curtis - Page 7

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          (1977), to which we defer in accordance with the doctrine of                
          Golsen v. Commissioner, 54 T.C. 742 (1970), affd. 445 F.2d 985              
          (10th Cir. 1971), we must examine the record to determine whether           
          there is a minimal evidentiary foundation supporting respondent’s           
          determination of unreported income.1  If there is not,                      
          respondent’s determination will be deemed arbitrary and,                    
          consequently, she will lose her presumption of correctness and              
          will be forced to go forward with the evidence.  Weimerskirch v.            
          Commissioner, supra.  The record, however, does contain evidence            
          supporting respondent’s determination of unreported income, and,            
          therefore, the burden of proof remains entirely with petitioner.            

          1    Although Weimerskirch v. Commissioner, 596 F.2d 358 (9th               
          Cir. 1979), revg. 67 T.C. 672 (1977), dealt specifically with               
          illegal unreported income, it is now well established that the              
          Court of Appeals for the Ninth Circuit applies the Weimerskirch             
          rule in all cases of unreported income where the taxpayer                   
          challenges the Commissioner’s determination on the merits.  E.g.,           
          Edwards v. Commissioner, 680 F.2d 1268, 1270 (9th Cir. 1982) (in            
          that case, involving unreported income from an income-generating            
          auto repair business owned by the taxpayer, the court stated:               
          “We note, however, that the Commissioner’s assertion of                     
          deficiencies are presumptively correct once some substantive                
          evidence is introduced demonstrating that the taxpayer received             
          unreported income.  Weimerskirch v. Commissioner, 596 F.2d 358,             
          360 (9th Cir. 1979).”); Petzoldt v. Commissioner, 92 T.C. 661,              
          689 (1989) ("the Ninth Circuit requires that respondent come                
          forward with substantive evidence establishing a ‘minimal                   
          evidentiary foundation’ in all cases involving the receipt of               
          unreported income to preserve the statutory notice's presumption            
          of correctness.  Weimerskirch v. Commissioner, 596 F.2d at 362."            
          (Emphasis added.)); Roat v. Commissioner, 847 F.2d 1379, 1382               
          (9th Cir. 1988) (Commissioner can rely on the presumption that              
          his determination is correct if taxpayer does not contest the               
          determination on the merits).                                               

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