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Regarding the 1993/1994 notice’s determinations of
unreported income, the Commissioner may satisfy the predicate
evidence requirement by showing that the taxpayer was connected
to unexplained bank deposits or cash. Weimerskirch v.
Commissioner, supra at 362; Schad v. Commissioner, 87 T.C. 609,
618-620 (1986), affd. 827 F.2d 774 (11th Cir. 1987); Tokarski v.
Commissioner, 87 T.C. 74 (1986). Here, the record contains ample
evidence of bank deposits and cash transactions to support
respondent’s determination of unreported income.
Second, the “naked assessment” exception to the presumption
of correctness applies only to unreported income; the taxpayer
always has the burden of proving entitlement to deductions.
United States v. Zolla, 724 F.2d 808, 809-810 (9th Cir. 1984).
Thus, the fact that respondent did not allow all of petitioner’s
claimed and unclaimed offsets and deductions does not deprive the
1992 and 1993/1994 notices of the presumption of correctness.
Accordingly, the notices sent to petitioner are adequately
supported and are not “naked assessments”.
Conclusiveness of No Change Letter
The no change letter, which purported to accept petitioner’s
1993 and 1994 fiduciary tax returns as filed, does not resolve
all issues regarding petitioner’s tax liability for those years.
8(...continued)
the Form 1099-MISC itself, to show that petitioner received the
income.
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