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face that respondent failed to make a determination with respect
to petitioners' tax liability, and we so hold.
Petitioners' contention that the notice of deficiency is
invalid because respondent "did not rely on actual taxpayer
information to make an independent determination of a deficiency"
is misplaced. As stated in Clapp v. Commissioner, supra at 1402,
unless the notice of deficiency reveals on its face that the
Commissioner failed to make a determination, the Commissioner is
not required to make an affirmative showing that a determination
was made on the basis of the taxpayers' return. In short, the
analysis outlined in Clapp begins and ends in this case with our
holding that the notice of deficiency is facially valid.
Moreover, the present case, like Clapp, is better suited to
an argument that respondent's determination was arbitrary or
simply incorrect. In fact, the petition filed on behalf of
petitioners contained an allegation that the notice of deficiency
was arbitrary. Of course, it is well settled that an arbitrary
determination does not render a notice of deficiency invalid.
The taxpayer's remedies with respect to an arbitrary or incorrect
notice of deficiency are to move to shift to the Commissioner the
burden of going forward with the evidence, or, in appropriate
circumstances, to move for litigation costs. Id. at 1403.
Although the record does not disclose whether Mr. DeCastro
pursued any of these points with Mr. McWade in settlement
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