- 15 -
Commissioner with respect to factual issues where the taxpayer
introduces credible evidence, the provision operates only where
the taxpayer establishes that he or she has complied with all
substantiation requirements, has maintained all required records,
and has cooperated with reasonable requests for witnesses,
information, documents, meetings, and interviews. Here, as
indicated above, petitioner introduced no evidence and failed to
cooperate in the stipulation process or trial preparation.
Section 7491(a) therefore effects no shift of burden in the
instant cases.
However, two additional limitations on the general rule bear
upon the case at bar. First, the Court of Appeals for the Ninth
Circuit, to which appeal in the instant case would normally lie,
has indicated that before the presumption of correctness will
attach in an unreported income case, the determination must be
supported by at least a “minimal” factual predicate or foundation
of substantive evidence linking the taxpayer to income-generating
activity or to the receipt of funds. Palmer v. United States,
116 F.3d 1309, 1312-1313 (9th Cir. 1997); see also Rapp v.
Commissioner, 774 F.2d 932, 935 (9th Cir. 1985); Weimerskirch v.
Commissioner, 596 F.2d 358, 361 (9th Cir. 1979), revg. 67 T.C.
672 (1977); Petzoldt v. Commissioner, 92 T.C. 661, 689 (1989).
Second, section 6201(d) states:
SEC. 6201(d). Required Reasonable Verification of
Information Returns.--In any court proceeding, if a
Page: Previous 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 NextLast modified: May 25, 2011