James D. Schlicher - Page 11

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               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            
               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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