- 4 - TCO Martin determined, based on his review of the documentation presented, that petitioner did not maintain adequate records to account for gross receipts from her flea market sales. TCO Martin therefore used a “cash T analysis”, an indirect method to reconstruct income. He compared petitioner’s known sources of income to her personal expenditures to determine whether more was spent than was reported. The cash T analysis reflected that petitioner expended $17,871 more than her known sources of income for 2002. TCO Martin concluded that the excess expenditures suggested that petitioner had unreported gross receipts of at least $17,871 from her flea market sales.3 Discussion Generally, the Commissioner’s determinations in a notice of deficiency are presumed correct, and the taxpayer has the burden of proving that those determinations are erroneous. See Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933). In some cases the burden of proof with respect to relevant factual issues may shift to the Commissioner under section 7491(a). Petitioner did not present evidence or argument that she satisfied the requirements of section 7491(a). Therefore, the burden of proof does not shift to respondent. 3Because of respondent’s mathematical error, the statutory notice of deficiency incorrectly indicated that the adjustment to petitioner’s Schedule C gross receipts was $17,368. The correct adjustment would have been $17,871.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 Next
Last modified: May 25, 2011