-223-
alternative, respondent maintains that, by directing The Five to
remit their payments to IRA and THC, and distributing those
payments to Carlco, TMT, BWK, and others, Kanter, Ballard, and
Lisle violated the assignment of income doctrine. Finally,
respondent asserts the Court should reallocate the income in
dispute to Kanter, Ballard, and Lisle pursuant to section 482.107
Petitioners assert the payments from The Five were earned
and properly reported as taxable income by IRA, THC, and other
Kanter-related entities. Petitioners also dispute respondent’s
assertion that the payments from The Five represented kickback
payments to Kanter, Ballard, and Lisle. Petitioners deny that
any kickback scheme existed.
The Commissioner’s deficiency determinations normally are
presumed to be correct, and the taxpayer bears the burden of
proof. Welch v. Helvering, 290 U.S. 111, 115 (1933). On the
other hand, the Commissioner bears the burden of proof with
regard to (1) any increase in the deficiency raised in the
pleadings, and (2) any case involving the issue of fraud with
intent to evade tax. Rule 142(a) and (b); see sec. 7454(a).
There is no dispute the payments from The Five constituted
taxable income to the persons or entities that earned the income.
107 The STJ report, at 84, incorrectly stated that
respondent improperly attempted to raise sec. 482 for first time
on brief. The record reflects that respondent timely raised the
issue in his amendment to answer. In addition, contrary to
petitioners’ arguments, respondent raised this issue on brief.
See Respondent’s Opening Brief at 449-550, 553.
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