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for the Fifth Circuit held that the notice was arbitrary because
it lacked any “ligaments of fact”. The court noted that the
notice of deficiency would have been sufficient to entitle the
Commissioner to a presumption of correctness if the Commissioner
had demonstrated unreported income through “some * * * means,
such as by showing the taxpayer’s * * * bank deposits”. Id. at
1134.
Petitioner’s situation is significantly different from that
of the taxpayer in Portillo. Here petitioner concedes that he
received the proceeds of the sale of his stock--although, in his
pretrial memorandum, he calls those proceeds a “partial
restitution”. Petitioner’s bank statement reflects a deposit of
$246,332.77 in December 1991. Moreover, Kidder Peabody’s records
indicate that petitioner is chargeable with other income from
dividends and prior sales of stock, including the income used to
pay his contractual account obligations to Kidder Peabody. These
are sufficient ligaments of fact to connect petitioner to the
income at issue. We hold that the notice of deficiency issued to
petitioner was valid.11
B. Pretrial Proceedings
Petitioner contends that respondent failed to comply with
the pretrial order and prejudiced his case. Petitioner urges
11 See supra note 4.
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