Joseph D. & Elizabeth M. Dunne - Page 42




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          Helvering v. Taylor, 293 U.S. 507, 515 (1935); Cebollero v.                 
          Commissioner, 967 F.2d 986, 990 (4th Cir. 1992), affg. T.C. Memo.           
          1990-618.                                                                   
               On rare occasions, this Court has recognized an exception to           
          these rules in cases involving unreported income where the                  
          Commissioner introduces no substantive evidence but relies solely           
          on the presumption of correctness.  Jackson v. Commissioner, 73             
          T.C. 394, 401 (1979).  In such cases, if the taxpayers challenge            
          the notice of deficiency on the ground that it is arbitrary, then           
          the determination is treated as a “naked” assessment and the                
          presumption of correctness does not attach.  Id.  However, this             
          is a limited exception, and it does not apply when the                      
          Commissioner has provided a minimal evidentiary foundation.                 
          Petzoldt v. Commissioner, 92 T.C. 661, 687-688 (1989); Fankhanel            
          v. Commissioner, T.C. Memo. 1998-403, affd. without published               
          opinion 205 F.3d 1333 (4th Cir. 2000).                                      
               This exception to the presumption of correctness (the                  
          exception) has been widely accepted among the Courts of Appeals.            
          See Blohm v. Commissioner, 994 F.2d 1542, 1549 (11th Cir. 1993),            
          affg. T.C. Memo. 1991-636; Dodge v. Commissioner, 981 F.2d 350,             
          353 (8th Cir. 1992), affg. in part and revg. in part 96 T.C. 172            
          (1991); Portillo v. Commissioner, 932 F.2d 1128, 1133-1134 (5th             
          Cir. 1991), affg. in part and revg. in part T.C. Memo. 1990-68;             
          United States v. Walton, 909 F.2d 915, 919 (6th Cir. 1990); Ruth            







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