Ramiro and Maria Martinez - Page 7

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          Palmer v. United States, 116 F.3d 1309, 1313 (9th Cir. 1997).               
          Once the Commissioner produces evidence linking the taxpayer to             
          an income-producing activity, the burden shifts to the taxpayer             
          to rebut the presumption by establishing that the Commissioner’s            
          determination is arbitrary or erroneous.  Rapp v. Commissioner,             
          supra at 935; Adamson v. Commissioner, 745 F.2d 541, 547 (9th               
          Cir. 1984), affg. T.C. Memo. 1982-371; see also United States v.            
          Janis, 428 U.S. 433, 441-442 (1976).                                        
               This case is appealable, barring a stipulation to the                  
          contrary, to the Court of Appeals for the Ninth Circuit.                    
          Consequently, we are bound to apply the law of the circuit as               
          summarized above.  Golsen v. Commissioner, 54 T.C. 742 (1970),              
          affd. 445 F.2d 985 (10th Cir. 1971).                                        
               The evidence on which respondent relies to satisfy his                 
          initial burden of production regarding his determination that               
          petitioners received unreported income is drawn from Forms 1099             
          that respondent received from third-party payers.  Because                  
          petitioners have stipulated that they received the income                   
          reported on the Forms 1099, respondent has met his burden of                
          production.  See Parker v. Commissioner, 117 F.3d 785, 787 (5th             
          Cir. 1997) (when the taxpayer does not dispute the receipt of               
          unreported income, the Commissioner “has no duty to investigate a           

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