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sustain respondent's determinations for the taxable years at
issue, except as set out below.
The first issue to be decided is who bears the burden of
proof in this case. A statutory notice of deficiency ordinarily
carries with it a presumption of correctness. Rule 142(a); Welch
v. Helvering, 290 U.S. 111 (1933). Due to this presumption,
taxpayers generally have both the burden of proof and the burden
of going forward with evidence. Dellacroce v. Commissioner, 83
T.C. 269, 280 (1984). However, if the taxpayer shows that the
statutory notice is arbitrary or without foundation, the burden
of going forward with the evidence shifts to the Commissioner.
Id.
In asking this Court to find that the notice of deficiency
is arbitrary, petitioner is asking us to explore the
underpinnings of that notice. As a general rule, we will not
look behind the statutory notice to examine the evidence used in
making the determination. Petzoldt v. Commissioner, 92 T.C. 661,
688 (1989); Llorente v. Commissioner, 74 T.C. 260, 264 (1980),
affd. in part and revd. and remanded in part 649 F.2d 152 (2d
Cir. 1981); Greenberg's Express, Inc. v. Commissioner, 62 T.C.
324, 327 (1974). The rare exception to this rule is where the
Commissioner, in a case involving unreported income, introduces
no direct evidence but rests on the presumption of correctness
and the taxpayer challenges the deficiency on the grounds that it
is arbitrary. Portillo v. Commissioner, supra at 1133; Schad v.
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