- 3 - for Perrier Group of America during 1995 and 1996. At the time he made his determinations, respondent had no record (i.e., no Forms W-2 or 1099) of petitioner’s working for either of these businesses. Petitioner failed to provide respondent with any information relating to his income. Respondent, using 1992 as the base year, reconstructed petitioner’s gross income relating to 1993 through 1996 by applying the Consumer Price Index (CPI) method to 1993 through 1996 and subtracting income reported on Forms W-2 and 1099. On December 9, 1998, respondent mailed petitioner notices of deficiency in which respondent determined that petitioner: (1) Received self-employment income of $5,524, $19,986, $17,165, and $23,329 relating to 1993, 1994, 1995, and 1996, respectively; and (2) was liable for income tax and, pursuant to section 1401, self-employment tax. OPINION I. Reconstructed Self-Employment Income Generally, a notice of deficiency is presumed correct, and the taxpayer bears the burden of proving that the determination is erroneous. See Welch v. Helvering, 290 U.S. 111, 115 (1933). The Court of Appeals for the Fifth Circuit, where an appeal would lie, has recognized, however, that “a court need not give effect to the presumption of correctness in a case involving unreported income if the Commissioner cannot present some predicate evidencePage: Previous 1 2 3 4 5 Next
Last modified: May 25, 2011