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21. if any underpayment of tax exists, whether such
underpayment by the Michoff, Jrs., for the 1990 tax year is due
to negligence or disregard of rules or regulations.
Some of the facts have been stipulated and are so
found. The stipulation of facts and attached exhibits are
incorporated herein by this reference.
All petitioners in these consolidated cases resided in
California at the time they filed their respective petitions.
These consolidated cases involve three generations of the same
family. For convenience, we combine our findings of fact with
our opinion under each separate issue heading.
Burden of Production
Petitioners argue that the notices of deficiency are
arbitrary and excessive on their face, and, therefore, the burden
of production should shift to respondent. We disagree.
Respondent's determinations are entitled to a presumption of
correctness. Rule 142(a); Welch v. Helvering, 290 U.S. 111
(1933). The burden is upon petitioners to demonstrate in the
first instance that the determination is arbitrary and
unreasonable in order to deprive it of the presumption of
correctness. Harbin v. Commissioner, 40 T.C. 373, 376 (1963).
Petitioners have failed to so demonstrate. Respondent has
provided sufficient evidence to convince this Court that the
notices of deficiency were neither arbitrary nor unreasonable.
Therefore, unless otherwise indicated, for all of the issues the
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