Kenneth Siebert - Page 8

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          proving that it is erroneous.  Rule 142(a); Welch v. Helvering,             
          290 U.S. 111, 115 (1933).  Because of this presumption of                   
          correctness, courts will generally not look behind the notice of            
          deficiency to examine the evidence upon which the determination             
          was made.  Dellacroce v. Commissioner, 83 T.C. 269, 280 (1984).             
          The Court of Appeals for the Fifth Circuit, to which appeal of              
          this case would lie, has noted, however, that "a court need not             
          give effect to the presumption of correctness in a case involving           
          unreported income if the Commissioner cannot present some                   
          predicate evidence supporting its determination."  Portillo v.              
          Commissioner, 932 F.2d 1128, 1133 (5th Cir. 1991), affg. in part            
          and revg. and remanding in part T.C. Memo. 1990-68.  If the                 
          presumption of correctness does not apply, the Commissioner's               
          determination will be deemed arbitrary, and consequently, she               
          will bear the burden of proving the correct amount of any taxes             
          owed.  Sealy Power, Ltd. v. Commissioner, 46 F.3d 382, 386 (5th             
          Cir. 1995), affg. in part and revg. and remanding in part T.C.              
          Memo. 1992-168.                                                             
               In her notice of deficiency, respondent determined that                
          petitioner had embezzlement income.  Based on her CPI                       
          calculations, she also determined that petitioner had unreported            
          self-employment income from his tax consulting practice and other           
          businesses.  We now address the validity of these determinations.           

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