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permitted this situation, and also purchased cashier’s checks in
such a manner so as to conceal certain activity from the
Government.
Pursuant to section 61(a), gross income includes income from
whatever source derived. Sec. 61(a); Cabirac v. Commissioner,
120 T.C. 163, 167 (2003). In addition, taxpayers are required to
keep permanent records that are sufficient to establish the
amount of gross income, deductions, credits, or other amounts on
their tax returns. See sec. 6001; sec. 1.6001-1, Income Tax
Regs. In this case, petitioner bears the burden of showing that
respondent’s determination is in error.6 Rule 142(a); Welch v.
Helvering, 290 U.S. 111, 115 (1933). Because the disputed items
of income adjustments concern several different sources, we
examine each source separately.
I. Coupon and Buy-Down Income
Respondent determined that petitioner failed to report
$124,684 of coupon and buy-down income. At trial and on brief,
respondent bolstered his determination by offering an alternate
computation to measure petitioner’s total coupon and buy-down
income.
6 With respect to the determination of underreported income,
no question has been raised with respect to the burden of proof
under sec. 7491(a). Even if petitioner had raised the issue, his
failure to keep adequate records and substantiate items has not
met the conditions for placing the burden on respondent. See
sec. 7491(a)(2).
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