- 21 -
Appeals for the Ninth Circuit authorities). Once the
Commissioner has introduced the necessary “predicate evidence”
concerning the unreported income, however, the taxpayer has the
usual burden of establishing, by a preponderance of the evidence,
that the Commissioner’s determination is arbitrary or erroneous.
See Rapp v. Commissioner, supra at 935; Petzoldt v. Commissioner,
supra at 689. The Court of Appeals has described the required
evidentiary foundation as “minimal”. Palmer v. IRS, 116 F.3d
1309, 1312-1313 (9th Cir. 1997). Moreover, this exception to the
presumption of correctness applies only to unreported income; the
taxpayer always has the burden of proving entitlement to any
deductions. See United States v. Zolla, 724 F.2d 808, 809-810
(9th Cir. 1984).
Petitioner asserts that the notice in the case at hand
should not be presumed correct, because there is insufficient
evidence linking petitioner to the funds paid to Universal, which
respondent claims are petitioner’s income. Petitioner notes that
Universal, not petitioner, actually received payment of the
funds. Moreover, although petitioner was one of the original
capital unit holders in Universal, petitioner asserts that there
is no evidence that petitioner was a unit holder (or other
beneficiary) of Universal during the year in issue. As a result,
according to petitioner, the presumption of correctness does not
apply because respondent has failed to show that petitioner
Page: Previous 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 NextLast modified: May 25, 2011