- 6 - that the Commissioner's determination is incorrect.2 Rule 142(a); Welch v. Helvering, 290 U.S. 111 (1933). Petitioners rely on Portillo v. Commissioner, 932 F.2d 1128 (5th Cir. 1991), affg. in part and revg. in part T.C. Memo. 1990- 68, which held that the Commissioner had a duty to investigate the "bald assertion" contained in a Form 1099 received from a third party to confirm whether it was supported by other financial records, and the Commissioner's failure to do so rendered the notice of deficiency arbitrary and erroneous. Id. at 1134. The Court of Appeals for the Fifth Circuit, however, has narrowed the holding in Portillo by declining to apply it where the Commissioner does not rely on a statement of a third party to determine that a deficiency exists. See Woodall v. Commissioner, 964 F.2d 361, 363 (5th Cir. 1992), affg. T.C. Memo. 1991-15. In the instant case, respondent based the determination in the notice of deficiency on petitioners' agreement in the New York consent form to an increase in their New York State income for 1995. See Sealy Power, Ltd. v. Commissioner, 46 F.3d 382, 386 (5th Cir. 1995), affg. in part, revg. in part on other grounds, and remanding in part T.C. Memo. 1992-168. 2 Internal Revenue Service Restructuring & Reform Act of 1998 (RRA 1998), Pub. L. 105-206, sec. 3001, 112 Stat. 685, 726- 727, added sec. 7491, which places the burden of proof on the Commissioner in certain circumstances. Sec. 7491 is applicable to court proceedings arising in connection with examinations commencing after July 22, 1998. See RRA 1998 sec. 3001(c), 112 Stat. 727; Higbee v. Commissioner, 116 T.C. 438, 440 (2001). The examination in the instant case commenced on Nov. 12, 1997. Accordingly, sec. 7491 is inapplicable.Page: Previous 1 2 3 4 5 6 7 8 9 10 Next
Last modified: May 25, 2011