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v. United States, 823 F.2d 1091, 1094 (7th Cir. 1987); Llorente
v. Commissioner, 649 F.2d 152, 156 (2d Cir. 1981), affg. in part
and revg. in part 74 T.C. 260 (1980); Weimerskirch v.
Commissioner, 596 F.2d 358, 362 (9th Cir. 1979), revg. 67 T.C.
672 (1977); Gerardo v. Commissioner, 552 F.2d 549, 554 (3d Cir.
1977), affg. in part and revg. in part T.C. Memo. 1975-341.
The Court of Appeals for the Fourth Circuit, to which this
case is appealable, has recognized the use of this exception by
other courts but has not had the occasion to expressly adopt or
reject it. See Williams v. Commissioner, 999 F.2d 760, 763-764
(4th Cir. 1993), affg. T.C. Memo. 1992-153. Because the Court of
Appeals for the Fourth Circuit has not expressly resolved the
issue of whether the Commissioner’s failure to present a minimal
evidentiary foundation prevents the presumption of correctness
from attaching,5 we apply the rule we stated in Jackson that has
5 In Cebollero v. Commissioner, 967 F.2d 986, 990 (4th Cir.
1992), affg. T.C. Memo. 1990-618, the Court of Appeals for the
Fourth Circuit stated:
in the first phase of a deficiency suit, the issue is
the arbitrariness of the Commissioner's determination,
and the taxpayer bears the burden of persuasion by a
preponderance of the evidence. That burden remains
with the taxpayer, and never shifts to the government.
If the taxpayer proves that the determination is
arbitrary, the presumption of correctness vanishes.* * *
However, the Court of Appeals has not clarified whether the
taxpayer satisfies the initial burden of persuading the court
that the determination is arbitrary by alleging that the
Commissioner has not introduced any substantive evidence and is
relying solely on the presumption of correctness, or if the
(continued...)
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