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determined there was sufficient probable cause to investigate
petitioner. CDI was unable to investigate petitioner, however,
because of the volume of cases under investigation and a lack of
resources at the time.
Petitioner’s Alleged Indigence
On August 18, 1997, 10 days after submitting her application
to increase her benefit on her disability insurance and stating
in her application to PRLIC that her annual income was $136,483,
petitioner submitted a request for free legal representation from
the Public Defender’s Office on the grounds of inability to pay.
To establish her indigence, petitioner submitted a financial
affidavit to the U.S. District Court for the Central District of
California. On this affidavit, which petitioner signed under
penalty of perjury, petitioner claimed she earned $500 per month
from self-employment, $250 per month from rental income, and $200
per year in interest income.
OPINION
I. Unreported Income and Disallowed Deductions
The Commissioner’s determinations generally are presumed
correct, and the taxpayer bears the burden of proving that those
determinations are erroneous.1 Rule 142(a); Welch v. Helvering,
1 The examination in this case commenced prior to July 22,
1998. Accordingly, sec. 7491 is inapplicable. See Warbelow’s
Air Ventures, Inc. v. Commissioner, 118 T.C. 579, 582 n.8 (2002),
affd. 80 Fed. Appx. 16 (9th Cir. 2003).
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