- 19 - hypothetical drug-dealing income where the Commissioner offered no proof either of income or of drug dealing. However, if the Commissioner either establishes the identity of the specific income or proves the source of unreported income, the taxpayer has the burden of proving the Commissioner’s determination incorrect. See, e.g., Hardy v. Commissioner, supra at 1004-1005 (showing of unexplained bank deposits sufficient to shift burden to taxpayer); Palmer v. United States, 116 F.3d 1309 (9th Cir. 1997) (showing that expenditures exceeded reported income sufficient to shift burden); Roat v. Commissioner, 847 F.2d 1379 (9th Cir. 1988) (presumption of correctness applies where taxpayer admitted receiving income); Delaney v. Commissioner, 743 F.2d 670 (9th Cir. 1984) (presumption of correctness applies against taxpayer who admits owning asset allegedly purchased with unreported income), affg. T.C. Memo. 1982-666; United States v. Stonehill, 702 F.2d 1288 (9th Cir. 1983). In the case at hand, respondent has shown through petitioner’s bank records both the receipt of specific items of unreported income (the bank deposits) and their likely source (receipts from sales and repairs of computer equipment).13 In 13As explained supra p. 12, responses to Agent Bricker’s mailing showed that petitioner received additional unreported income of $74,470.52 from cash sales during the years in issue. Respondent did not attempt to use statistical methods to estimate the amount of unreported cash sales that petitioner received from sources who did not respond to Agent Bricker’s mailing. For a (continued...)Page: Previous 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 Next
Last modified: May 25, 2011