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Mountlake between 1992 and 1995.3 Tax exempt status has never
been obtained for Mountlake under section 501(c)(3).4
OPINION
Issue 1. Unreported Income From Landscaping Services
The Commissioner's determinations of fact are presumptively
correct, and the taxpayer bears the burden of proving by a
preponderance of evidence that those determinations are
erroneous. See Rule 142(a); Welch v. Helvering, 290 U.S. 111,
115 (1933); United States v. Molitor, 337 F.2d 917, 922 (9th Cir.
1964).
A. Reconstruction of Income
Respondent used indirect methods of reconstructing
petitioners' income for the years in issue. Deficiencies arising
from unreported income as determined by indirect methods of proof
are entitled to a presumption of correctness "once some
substantive evidence is introduced demonstrating that the
taxpayer received unreported income." United States v.
Stonehill, 702 F.2d 1288, 1293 (9th Cir. 1983). Petitioners
admit that they received income from the provision of landscaping
services. The burden is therefore on petitioners to show any
3In 1992, 1993, 1994, and 1995, petitioners were also the
only individuals to hold signature authority over accounts used
by Green Acres and Landscaping.
4We also note that tax-exempt status has never been obtained
for Green Acres or Landscaping.
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Last modified: May 25, 2011