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“describe the basis” for the Commissioner’s
determination. This rule also provides a reasonable
method for enforcing the requirements of section 7522.
[Fn. ref. omitted.]
We then held that where the notice of deficiency fails to
describe the basis on which the Commissioner relies to support a
deficiency determination and that basis requires the presentation
of evidence that is different from that which would be necessary
to resolve the determinations described in the notice of
deficiency, the burden of proof will be placed on the
Commissioner with respect to that issue. Id.
In the instant case, the notice of deficiency increased
Russell and Clarice’s gross income for 1994 by $751,988.
Respondent identified this adjustment under the heading “ORDINARY
INCOME (WHIPSAW)” and explained that “We have adjusted your gross
income to include amounts received for grain income for
$751,988.00 in 1994.” No further explanation was provided
regarding the reason for including the additional amount in gross
income. In their petition, Russell and Clarice alleged that
respondent “erroneously included within the taxpayers’ gross
income grain income in the amount of $751,988 for the tax year
1994". In his answer, respondent denied this allegation but did
not elaborate on the reason for the inclusion of the additional
amount in gross income. Thus, neither the notice of deficiency
nor respondent’s answer to Russell and Clarice’s petition
describes distributions in excess of basis as respondent’s reason
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