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OPINION
I. Whether the Notice of Deficiency Is Entitled to a Presumption
of Correctness
As a general rule, the Commissioner’s determinations are
presumed correct, and the taxpayer has the burden of proving them
incorrect. See Rule 142(a); United States v. Janis, 428 U.S.
433, 441-442 (1976); Welch v. Helvering, 290 U.S. 111, 115
(1933); Feldman v. Commissioner, 20 F.3d 1128, 1132 (11th Cir.
1994), affg. T.C. Memo. 1993-17. Petitioners argue that
respondent’s determination is entitled to no presumption of
correctness because it was arbitrary and capricious.
The Court of Appeals for the Eleventh Circuit, to which this
case is appealable absent stipulation, has stated that the
presumption of correctness adheres once the Commissioner has made
a “minimal” evidentiary showing linking the taxpayer to the
alleged income-producing activity. Blohm v. Commissioner, 994
F.2d 1542, 1549 (11th Cir. 1993), affg. T.C. Memo. 1991-636.9 The
9 Petitioners’ reply brief states that because this case was
tried in St. Paul, Minn., and because petitioners have ties to
Minnesota, they “assume that a stipulation to appeal the case to
the Eighth Circuit will be a routine matter.” See sec.
7482(b)(2). We need not linger long over petitioners’
assumption, however, for we discern no essential difference in
the standards applied in the Eleventh and Eighth Circuits in
determining whether the statutory notice is supported by an
adequate evidentiary foundation to sustain the presumption of
correctness. Cf. Page v. Commissioner, 58 F.3d 1342, 1347 (8th
Cir. 1995) (the presumption of correctness fails “where the
Commissioner makes the assessment without any foundation or
supporting evidence” (Emphasis added.)), affg. T.C. Memo. 1993-
(continued...)
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Last modified: May 25, 2011