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OPINION
I. Burden of Proof
As a general rule, the Commissioner’s determination of a
taxpayer’s liability for an income tax deficiency is presumed
correct, and the taxpayer bears the burden of proving that the
determination is improper. See Rule 142(a); Welch v. Helvering,
290 U.S. 111, 115 (1933). A limitation on this general rule
potentially applies in this case. Courts of Appeals, including
that for the Eleventh Circuit, to which an appeal in this case
would normally lie, have indicated that before the Commissioner
may rely on the presumption of correctness in unreported income
cases the determination must be supported by at least a “minimal”
factual predicate or foundation of substantive evidence linking
the taxpayer to the income generating activity or to the receipt
of funds. Blohm v. Commissioner, 994 F.2d 1542, 1549 (11th Cir.
1993), affg. T.C. Memo. 1991-636; see also Palmer v. United
States, 116 F.3d 1309, 1313 (9th Cir. 1997); United States v.
Walton, 909 F.2d 915, 918-919 (6th Cir. 1990).
Where the Commissioner introduces such evidence to support a
determination that the taxpayer received unreported income, as
respondent did here, the burden generally is on the taxpayer to
show by a preponderance of the evidence that the determination
was arbitrary or erroneous. Hardy v. Commissioner, 181 F.3d
1002, 1004 (9th Cir. 1999), affg. T.C. Memo. 1997-97. Deductions
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