- 8 -
Assuming, as other courts have required,3 that the
Commissioner must provide an evidentiary foundation for the
determination that a taxpayer has received unreported income, we
are satisfied that the New York consent form reflecting an
increase to petitioners' State taxable income for 1995
constitutes predicate evidence in the instant case for
respondent's determination in the notice of deficiency.
Petitioners' admission to an additional State income tax
liability due to unreported income provides a sufficient link to
their income-generating acts. Petitioners argue that the New
York consent form is ambiguous and could stem from disallowed
deductions. To the contrary, we note that the language of the
New York consent form states that the State audit disclosed an
increase in petitioners' income and shows no disallowed
deductions. Such evidence is sufficient to satisfy any predicate
evidence requirement. Accordingly, we hold that the notice of
deficiency in the instant case is presumed correct and the burden
of proof is on petitioners.
III. Exclusion of Testimony of Petitioners' Witness
Before agreeing to submit the case to the Court as fully
stipulated, petitioners argued that they agreed to a settlement
with the State of New York Department of Taxation and Finance to
3 See Portillo v. Commissioner, 932 F.2d 1128, 1134 (5th
Cir. 1991), affg. in part and revg. in part T.C. Memo. 1990-68;
Anastasato v. Commissioner, 794 F.2d 884, 887 (3d Cir. 1986),
vacating and remanding T.C. Memo. 1985-101; Rapp v. Commissioner,
774 F.2d 932, 935 (9th Cir. 1985), affg. an unreported Order of
this Court.
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