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Judgment for the Government was entered on September 30, 1994,
and an appeal by Mr. Kersting (and others) of the judgment is
pending before the Court of Appeals for the Ninth Circuit.
On September 14, 1995, respondent issued a notice of
deficiency to petitioner that determined deficiencies and
additions to tax based on gross income attributable to petitioner
through the 33 corporations.
Discussion
Presumption of Correctness
Petitioner moves to shift the burden of proof to respondent.
The parties agree respondent based his determination of
unreported income on the District Court's findings in Kersting
(Consolidated Cases). Petitioner contends respondent's sole
reliance on those findings makes the determination arbitrary and
erroneous so as to shift the burden of proof to respondent.3 We
disagree.
Respondent's determination is generally presumed correct,
and the taxpayer has the burden of proof. See Rule 142(a); Welch
v. Helvering, 290 U.S. 111 (1933). However, the presumption of
correctness may not attach in certain unreported income cases if
respondent does not present some predicate evidence supporting
3Petitioner does not assert that respondent failed to
"determine" the amount of deficiency pertaining to the years at
issue as required by sec. 6212(a). Compare Scar v. Commissioner,
814 F.2d 1363 (9th Cir. 1987), revg. 81 T.C. 855 (1983).
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