Norman W. Klootwyk - Page 4

          Helvering, 290 U.S. 111, 115 (1933).3  In order for the                     
          presumption of correctness to attach to the deficiency                      
          determination in unreported income cases, the Commissioner must             
          establish “some evidentiary foundation” connecting the taxpayer             
          with the income-producing activity, Weimerskirch v. Commissioner,           
          596 F.2d 358, 361-362 (9th Cir. 1979), revg. 67 T.C. 672 (1977),            
          or demonstrate that the taxpayer received unreported income,                
          Edwards v. Commissioner, 680 F.2d 1268, 1270 (9th Cir. 1982) (the           
          Commissioner’s assertion of a deficiency is presumptively correct           
          once some substantive evidence is introduced demonstrating that             
          the taxpayer received unreported income).  McManus v.                       
          Commissioner, T.C. Memo. 2006-57; see also Palmer v. United                 
          States, 116 F.3d 1309, 1312 (9th Cir. 1997) (“The Commissioner’s            
          deficiency determinations and assessments for unpaid taxes are              
          normally entitled to a presumption of correctness so long as they           
          are supported by a minimal factual foundation.”).  If the                   
          Commissioner introduces some evidence that the taxpayer received            
          unreported income, the burden shifts to the taxpayer to show by a           
          preponderance of the evidence that the deficiency was arbitrary             

               3  Pursuant to sec. 7491(a), the burden of proof as to                 
          factual matters affecting liability for tax shifts to respondent            
          under certain circumstances.  Petitioner has neither alleged that           
          sec. 7491(a) applies nor established his compliance with the                
          requirements of sec. 7491(a)(2)(A) and (B) to substantiate items,           
          maintain records, and cooperate fully with respondent’s                     
          reasonable requests.  Petitioner therefore bears the burden of              

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