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As a threshold matter, respondent must show some income
source to support his determination. Weimerskirch v.
Commissioner, supra. Here, respondent has established the
existence of income from the Canadian brokerage accounts in the
form of an exhibit presented at Mr. Ford’s Fatico5 hearing. This
exhibit showed over $5 million in capital gains for 1986 on which
no tax was paid. Respondent has also established that both
petitioners controlled these accounts and that these corporations
received income totaling more than Can$ 8 million from trading in
International Tillex stock.
The record shows that both petitioners controlled, and
received income from, the nominee corporations. Mr. Ford,
through his assistant Linda Hazlett, who acted under his
direction and control, set up and controlled Blackbird
Investments and its corporate trading account. He and Ms. Ford
received $1,750,000 from the Maryland Bank in Luxembourg, secured
4(...continued)
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. Petitioners make
no argument that sec. 7491(a)(1) applies to this case, and we
conclude that it does not (as this case predates the enactment of
sec. 7491(a)).
5 In U.S. District Court, the parties are given an
opportunity to present evidence with respect to sentencing. U.S.
Sentencing Guidelines sec. 6A1.3 (2002). This evidentiary
hearing is held before the sentencing of a convicted criminal.
See United States v. Fatico, 579 F.2d 707 (2d Cir. 1978).
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