- 11 -
To carry his burden of proof, thus entitling petitioner to
the nonrecognition benefits of section 1034, he must prove that
he has satisfied all of the section's requirements. Rule 142;9
Welch v. Helvering, 290 U.S. 111, 115 (1933); Durando v. United
States, 70 F.3d 548, 550 (9th Cir. 1995).
9 At trial and on brief, petitioner asserts that respondent's
notice of deficiency was arbitrary and excessive and not entitled
to a presumption of correctness, thus shifting the burden of
proof to respondent where, in determining the deficiencies for
the taxable year in issue, respondent failed to allow for the
cost of any of the replacement real property in Clayton,
California. To support his position, petitioner relies on such
cases as Herbert v. Commissioner, 377 F.2d 65, 69 (9th Cir.
1966), revg. T.C. Memo. 1964-223; Jackson v. Commissioner, 73
T.C. 394, 401 (1979); and Dellacroce v. Commissioner, 83 T.C. 269
(1984). However, petitioner's reliance on this line of cases is
misplaced.
It is well settled that the Commissioner's determinations in
a notice of deficiency generally are presumed correct, and the
taxpayer bears the burden of proving that those determinations
are erroneous. Rule 142(a); Welch v. Helvering, 290 U.S. 111,
115 (1933); Durando v. United States, 70 F.3d 548, 550 (9th Cir.
1995). However, a showing that the statutory notice is arbitrary
and excessive within the rule of Helvering v. Taylor, 293 U.S.
507 (1935), may have the effect of shifting the burden of going
forward to respondent. Jackson v. Commissioner, supra.
As a general rule, this Court will not look behind the
statutory notice of deficiency to examine the evidence used in
making the determination. Jackson v. Commissioner, supra at 400.
On rare occasions, however, we have recognized an exception to
the foregoing rule in cases involving unreported income, where
the respondent introduced no predicate evidence but rested on the
presumption of correctness and the petitioner challenged the
notice of deficiency. Dellacroce v. Commissioner, supra at 280
citing Jackson v. Commissioner, supra; Delaney v. Commissioner,
T.C. Memo. 1982-666, affd. 743 F.2d 670 (9th Cir. 1984).
Petitioner contends that his case is governed by the
exception rather than the general rule. We disagree.
Respondent's determination is not based on petitioner's alleged
unreported income. Therefore, petitioner does not fall within
the exception described above. Accordingly, the burden of proof
rests with the petitioner. Rule 142(a).
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