-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
proof.
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