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orally moved to dismiss the case for failure to properly
prosecute pursuant to Rule 123(b). The Court denied the motion.
Counsel for petitioner, David M. Kirsch, explained to the
Court why petitioner, upon Mr. Kirsch's advice, refused to
respond to respondent's subpoena duces tecum despite the Court's
denial of petitioner's motion to quash. Mr. Kirsch stated:
I am profoundly uncertain that Mr. Wadsworth can
say anything at all, even for example, I don't have any
documents without waiving his privilege. I just don't
know what the state of the law is there."
The determinations of the Commissioner in her statutory
notice of deficiency are presumed to be correct, and petitioner
has the burden of proving otherwise. Rule 142(a); Welch v.
Helvering, 290 U.S. 111 (1933). A taxpayer is required to
maintain records that are sufficient to enable the Commissioner
to determine his correct income tax liability. Sec. 6001;
Meneguzzo v. Commissioner, 43 T.C. 824, 831-832 (1965); sec.
1.6001-1(a), Income Tax Regs.
At trial, petitioner refused to proceed to carry his burden
of proof, relying on his claimed rights under the Fifth
Amendment.
Some courts have recognized a limited exception to this
general rule where the Commissioner alleges that the taxpayer has
unreported income. In some cases, the deficiency determination
must be supported by some evidentiary foundation linking the
taxpayer to the alleged illegal income producing activity. See
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