Maria E. Magallon - Page 5

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               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                   
               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.                                         

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