- 32 -
(9th Cir. 1984), affg. T.C. Memo. 1982-666; Edwards v.
Commissioner, 680 F.2d 1268, 1270 (9th Cir. 1982); Weimerskirch
v. Commissioner, 596 F.2d 358, 360-361 (9th Cir. 1979) ("the
Commissioner must offer some foundational support for the
deficiency determination before the presumption of correctness
attaches to it"), revg. 67 T.C. 672 (1977). Once the Government
has carried its initial burden of introducing some minimal
evidence linking the taxpayer with income-producing activity, the
burden shifts to the taxpayer to rebut the presumption by
establishing by a preponderance of the evidence that the
deficiency determination is arbitrary or erroneous. Rapp v.
Commissioner, supra at 935; Adamson v. Commissioner, 745 F.2d
541, 547 (9th Cir. 1984), affg. T.C. Memo. 1982-371; United
States v. Stonehill, 702 F.2d 1288, 1294 (9th Cir. 1983).
Respondent has established petitioners' connection with an
income-producing activity, such as the restaurant, rental
property, the lending of money, and the sale of real estate.
Therefore, petitioners bear the burden of proving that respondent
erred.
Section 6001 requires all taxpayers to maintain adequate
books and records of taxable income. In the absence of adequate
records, the Commissioner is authorized to reconstruct a
taxpayer's income by any reasonable method that clearly reflects
the taxpayer's income. Sec. 446(b); Holland v. United States,
348 U.S. 121, 130-132 (1954); Cracchiola v. Commissioner, 643
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