- 10 -- 10 - a factor to be considered in assessing respondent's justification. Hanson v. Commissioner, supra at 1156. Petitioners contend that in the notice of deficiency respondent "merely alleged" unreported income based on a Form 1099-R issued by a third party. Essentially, petitioners argue that there was an inadequate factual basis for the determination and that, consequently, respondent's position was not substantially justified. This argument is premised upon Portillo v. Commissioner, 932 F.2d 1128 (5th Cir. 1991) (Portillo I), affg. in part, revg. in part and remanding T.C. Memo. 1990-68, and its companion case Portillo v. Commissioner, 988 F.2d 27 (5th Cir. 1993) (Portillo II), revg. and remanding T.C. Memo. 1992-99. For the reasons that follow, petitioners' reliance on these cases is misplaced. In Portillo I, there was a $24,505 discrepancy between the amount reported on the taxpayer's return ($10,800) and the amount reported by a third party payor (Navarro) on a Form 1099 ($35,305). During the audit, the taxpayer conceded his failure to report $3,125 in income received from Navarro, but denied receiving more than $13,925 from him. Respondent's agent then contacted Navarro, who was able to produce copies of checks paid to the taxpayer in the amount of $13,925, but did not have copies of checks for the remaining $21,380 reported on the Form 1099. Thereafter, respondent issued a notice of deficiency. The Court of Appeals for the Fifth Circuit found that respondent hadPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Next
Last modified: May 25, 2011