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Appeals, including that for the Sixth Circuit to which appeal in
the instant cases would normally lie, have indicated that before
the Commissioner may rely on the presumption of correctness in
unreported income scenarios, 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. United States v. Walton,
909 F.2d 915, 918-919 (6th Cir. 1990); see also, e.g., Palmer v.
United States, 116 F.3d 1309, 1313 (9th Cir. 1997); Portillo v.
Commissioner, 932 F.2d 1128, 1133 (5th Cir. 1991), affg. in part,
revg. in part, and remanding T.C. Memo. 1990-68; Anastasato v.
Commissioner, 794 F.2d 884, 886-887 (3d Cir. 1986), vacating and
remanding T.C. Memo. 1985-101; Weimerskirch v. Commissioner, 596
F.2d 358, 361-362 (9th Cir. 1979), revg. 67 T.C. 672 (1977).
To the extent that those decisions might be on point here,
and as will be shown in greater detail below, respondent has
introduced sufficient evidence connecting petitioners to the
income-producing activities attributed to HGAMC and to the
receipt of financial benefits therefrom. For instance,
Mr. Richardson’s services were paramount in generating the
underlying sales, and both petitioners received distributions,
directly or indirectly, out of the funds received.
The Court is satisfied that the totality of the record is
sufficient to meet any pertinent burden of production placed on
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