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Colorado. Petitioner sought out these corporations and organized
new corporations with the same name as the delinquent
corporations and, then, transferred the delinquent corporations'
real property to a third corporation that petitioner directly or
indirectly controlled. Thereafter, petitioner would benefit from
transactions in the acquired real property.
The State of Colorado conducted a criminal investigation
regarding petitioner’s illicit activity resulting in the
prosecution and incarceration of petitioner. Thereafter, the
State of Colorado provided respondent with limited records of
petitioner and his related corporate entities that had been used
in support of the criminal investigation. Respondent used those
records to reconstruct petitioner’s 1992 and 1993 income for
Federal income tax purposes. Petitioner has not filed Federal
income tax returns or maintained any records of his income-
producing activity.
Reconstruction of Petitioner’s Income for 1992 and 1993
Respondent, based on a form of a specific items
reconstruction method, determined that petitioner had unreported
income from real estate transactions of $75,614 and $27,462 for
1992 and 1993, respectively. In general, the Commissioner’s
determination enjoys a presumption of correctness and the
taxpayer bears the burden of showing that the Commissioner’s
income determinations are in error. Rule 142(a); Helvering v.
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