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It is well settled that determinations made by the
Commissioner in a notice of deficiency normally are presumed to
be correct, and the taxpayer bears the burden of proving that
those determinations are erroneous. Rule 142(a); INDOPCO Inc. v.
Commissioner, 503 U.S. 79, 84 (1992); Welch v. Helvering, 290
U.S. 111, 115 (1933). In addition, this Court ordinarily will
not look behind a notice of deficiency to examine the evidence
used or the propriety of the Commissioner's motives or conduct in
determining the deficiency. Riland v. Commissioner, 79 T.C. 185,
201 (1982); Greenberg's Express, Inc. v. Commissioner, 62 T.C.
324, 327 (1974).
A recognized exception to the general rule that the
Commissioner's determination is presumed to be correct arises in
cases involving unreported income where the taxpayer challenges
the notice of deficiency on the grounds that it is arbitrary and
the Commissioner fails to substantiate the determination with
predicate evidence. Sealy Power, Ltd. v. Commissioner, 46 F.3d
382, 386 (5th Cir. 1995), affg. in part, revg. in part and
remanding in part T.C. Memo. 1992-168; Portillo v. Commissioner,
932 F.2d at 1133.
Petitioner contends that, in an unreported income case such
as this case, respondent's reliance on information reported to
respondent by third-party payors on Forms 1099, standing alone,
does not provide the predicate evidence necessary to substantiate
respondent's determinations. In conjunction with this
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