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Throughout his posttrial briefs, petitioner repeatedly
asserts that respondent failed to prove that he realized
unreported income. In effect, petitioner argues that
respondent bears the burden of proving that he realized
unreported income from the marijuana transaction in 1983.
As a general rule, the Commissioner's determination of a
tax deficiency is presumptively correct, and the taxpayer
bears the burden of proving that it is erroneous. See Rule
142(a); Welch v. Helvering, 290 U.S. 111 (1933). All Rule
references are to the Tax Court Rules of Practice and
Procedure.
Courts recognize a limited exception to this general
rule in cases such as this where the Commissioner's notice
of deficiency determines that the taxpayer failed to report
income derived from illegal activities. See Petzoldt v.
Commissioner, 92 T.C. 661, 688 (1989); see also Rapp v.
Commissioner, 774 F.2d 932, 935 (9th Cir. 1985); Llorente
v. Commissioner, 649 F.2d 152, 156 (2d Cir. 1981), affg. in
part and revg. in part 74 T.C. 260 (1980); Weimerskirch v.
Commissioner, 596 F.2d 358 (9th Cir. 1979), revg. 67 T.C.
672 (1977); Dellacroce v. Commissioner, 83 T.C. 269, 287
(1984). In such cases, the notice of deficiency will be
considered lacking a rational basis and not entitled to
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