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taxpayer controls a corporation and uses its funds for personal
purposes. Yelencsics v. Commissioner, 74 T.C. 1513, 1532-1533
(1980). Petitioner bears the burden of proving that respondent’s
determination in the notice of deficiency is arbitrary or
erroneous; respondent is presumed correct once he has put forth
some evidence as to the source of petitioner’s income. See Rule
142(a); Welch v. Helvering, 290 U.S. 111 (1933); Palmer v. United
States, 116 F.3d 1309, 1313 (9th Cir. 1997); Weimerskirch v.
Commissioner, 596 F.2d 358 (9th Cir. 1979), revg. 67 T.C. 672
(1977).6
As a threshold matter, respondent must support his
determination by showing an income source beneficially owned by
petitioner. Weimerskirch v. Commissioner, supra. “‘Beneficial
ownership is marked by command over property or enjoyment of its
economic benefits.’” Cordes v. Commissioner, T.C. Memo. 1994-377
6 Sec. 7491(a) was added to the Internal Revenue Code by
the Internal Revenue Service Restructuring and Reform Act of
1998, Pub. L. 105-206, sec. 3001(c), 112 Stat. 727, effective for
court proceedings arising from examinations commencing after July
22, 1998. Sec. 7491(a)(1) provides that the burden of proof
shifts to the Commissioner in specified circumstances. We
conclude that sec. 7491(a) does not apply to the unreported
income issue in this case. Petitioner has not in this proceeding
presented “credible evidence” on that issue. See Higbee v.
Commissioner,116 T.C. 438, 442 (2001)’ see also Blodgett v.
Commissioner, 394 F.3d 1030 (8th Cir. 2005), affg. T.C. Memo.
2003-212. Nor has she proven that she complied with the
requirements of sec. 7491 (a)(2)(A) and (B) to substantiate
items, to maintain required records, and to cooperate fully with
respondent’s reasonable requests. See Weaver v. Commissioner,
121 T.C. 273, 275 (2003).
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