- 42 - 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); RuthPage: Previous 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 NextLast modified: March 27, 2008