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category for the 1990 tax year. The scratch pad categories are
identical to the expense categories listed on Schedule C of
petitioners' 1990 tax return. Petitioner personally created all
the scratch pads.
To create each scratch pad, petitioner retrieved an expense
item for a Schedule C category from the MYM system. He then
listed the MYM expense on a numbered scratch pad.3 Petitioner
also retrieved the DAC expense for the same category and then
listed it on the same numbered scratch pad.4 The computer added
the MYM items to the DAC items to produce a scratch pad dollar
amount total for each Schedule C category. Finally, the computer
recorded the dollar amount total from a scratch pad onto the
appropriate line of petitioner's Schedule C.
I. Preliminary Issues
A. Burden of Proof
Respondent initially determined a deficiency in the amount
of $60,952. After concessions, the deficiency was substantially
reduced. Petitioner argues that respondent's determination was
arbitrary, and, thus, the burden of proof shifted to respondent.
A statutory notice of deficiency is presumed correct. Rule
142(a); Welch v. Helvering, 290 U.S. 111 (1933). Petitioner has
3 The MYM amounts listed on each scratch pad are
identical to the amounts listed on the MYM Summary.
4 The DAC amounts are identical to the amounts on the DAC
Accounting Summary under the column "Balance YTD".
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Last modified: May 25, 2011