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Circuit, the presumption of correctness will not be given effect
unless the Commissioner produces "evidence linking the taxpayer
to the tax-generating activity in cases involving unreported
income, whether legal or illegal." Anastasato, supra at 887. In
these cases, respondent's notice of deficiency for 1987 is based
on petitioner's failure to report an attorney's fee (or
attorney's referral fee) of $408,318. We conclude there is
sufficient evidence that petitioner was entitled to an attorney's
fee (e.g., the retainer agreement).
Petitioner claims that respondent lost petitioner's 1987
return. Petitioner, however, has failed to propose any findings
of fact in support of that claim, and we have made no such
finding. Petitioner has failed to carry his burden of proof on
that point. Moreover, even if facts did support that claim,
petitioner has failed to show that respondent's determination was
arbitrary. Perhaps respondent had abstracted data from
petitioner's return and no longer needed it. Indeed, it is
difficult to understand just what petitioner's complaint is.
Petitioner is not claiming that he did report the attorney's fee
on his return and that respondent is double charging him.
Whether respondent had petitioner's return or not, respondent
charged petitioner with income respondent had reason to believe
petitioner did not report. There is nothing arbitrary about
that.
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