- 22 -
personally received the unreported income described in the
notice.
Although some of the authorities cited by petitioner, such
as Hardy v. Commissioner, 181 F.3d 1002, 1004 (9th Cir. 1999),
and Rapp v. Commissioner, supra at 935, do mention the taxpayer’s
“receipt” of income, it is nevertheless clear that the
Commissioner may satisfy the predicate evidence requirement in
unreported income cases by introducing evidence linking the
taxpayer to tax-generating acts. See Shriver v. Commissioner, 85
T.C. 1, 4 (1985). Alternatively, respondent may satisfy the
predicate evidence requirement by showing the taxpayer was
connected to unexplained bank deposits or cash. See Schad v.
Commissioner, 87 T.C. 609, 618-620 (1986) (discussing Court of
Appeals for the Ninth Circuit authorities); Tokarski v.
Commissioner, 87 T.C. 74 (1986).8
The record contains ample evidence linking petitioner both
to tax-generating acts and to bank deposits of the income
8 The authorities cited by petitioner, when read in full,
support this conclusion. For example, although Rapp v.
Commissioner, 774 F.2d 932, 935 (9th Cir. 1985) does mention
evidence of receipt, it also states that “Once the Government has
carried its initial burden of introducing some evidence linking
the taxpayer with income-producing activity” (emphasis added),
the burden of proof shifts to the taxpayer. Moreover, Hardy v.
Commissioner, 181 F.3d 1002, 1005 (9th Cir. 1999), states that
the exception to the presumption of correctness applies only
where the Commissioner has failed to provide any evidentiary
foundation for the deficiency notice.
Page: Previous 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 NextLast modified: May 25, 2011