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Court with a pretrial memorandum as required by the Court’s
standing pretrial order. Respondent asserted, however, that he
had received several pieces of frivolous correspondence from Paul
Basile (Mr. Basile) before the trial session and that Mr. Basile
stated in much of the correspondence that he was not disputing
the existence or amount of the tax liabilities.
Respondent requested in his motion that we enter a judgment
by default against petitioners and find reduced deficiencies in
income tax, penalties, and additions to tax for each petitioner.
In support of the motion for judgment by default, respondent
argues that “petitioners have completely failed to comply with
the Court’s Orders and have ignored the Tax Court’s Rules of
Practice and Procedure”.
Discussion
In general, the Commissioner’s determination of underlying
tax deficiencies is presumed correct, and the taxpayer bears the
burden of proving otherwise. Rule 142(a); Welch v. Helvering,
290 U.S. 111, 115 (1933). Unless otherwise indicated,
petitioners bear the burden of proof in this case.2 Petitioners
2When a case involves unreported income and is appealable to
the Court of Appeals for the Third Circuit, the Commissioner’s
determination of unreported income is entitled to the presumption
of correctness only if the determination is supported by some
evidence linking the taxpayer to the tax-generating activity.
Anastasato v. Commissioner, 794 F.2d 884, 887 (3d Cir. 1986),
vacating T.C. Memo. 1985-101. As this case is appealable to the
Court of Appeals for the Third Circuit, barring a stipulation to
the contrary, the Court is bound to apply the law of the Court of
(continued...)
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