- 12 - from Lubbock. As to the newspaper income, petitioners argue, respondent failed to prove: (1) That the newspaper was an income-producing activity that was engaged in by petitioners and (2) that petitioners actually received income from the newspaper. On the basis of the facts at hand, we agree with respondent that petitioners are liable for Federal income tax on the amount of reconstructed income. As to the burden of proof, the Supreme Court has held that a notice of deficiency “has the support of a presumption of correctness, and the petitioner has the burden of proving it to be wrong.” Welch v. Helvering, 290 U.S. 111, 115 (1933); see also United States v. Janis, 428 U.S. 433, 441 (1976); Helvering v. Taylor, 293 U.S. 507, 515 (1935). This presumption “is not evidence itself and disappears upon the introduction of evidence to overcome it.” Pizzarello v. United States, 408 F.2d 579, 583 (2d Cir. 1969); see Compton v. United States, 334 F.2d 212, 216 (4th Cir. 1964); Ky. Trust Co. v. Glenn, 217 F.2d 462, 465 (6th Cir. 1954). “If the taxpayer rebuts the presumption by showing that it is arbitrary and erroneous, the presumption disappears.” Anastasato v. Commissioner, 794 F.2d 884, 887 (3d Cir. 1986), vacating and remanding T.C. Memo. 1985-101; see Helvering v. Taylor, supra at 515. Whereas the Courts of Appeals may vary on the effect upon the burden of proof when the presumption does disappear, United States v. Janis, supra at 441, the law of the Fifth Circuit, thePage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Next
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