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gain/loss on the sale of the FRC stock, but respondent has not
argued that the alleged unreported income relates to the sale of
Mr. Dunne’s FRC stock. Because respondent has not shown us any
link between petitioners and either the $15,000 of unreported
income or any income-producing activity that could have generated
a $15,000 capital gain, respondent has not provided the minimal
evidentiary foundation required for the presumption of
correctness to attach on this issue. Therefore, respondent has
not met the initial burden of showing that petitioners had
unreported income in 1999 that is normally satisfied by the
presumption of correctness, and we find for petitioners on this
issue. See Foster v. Commissioner, 391 F.2d 727, 735 (4th Cir.
1968), affg. in part and revg. in part T.C. Memo. 1965-246.
VI. Whether Petitioners are Liable for Additions to Tax Under
Section 6651(a)(1) for 1997 and 1999
Section 6651(a)(1) imposes an addition to tax of up to 25
percent of the amount required to be shown as tax for failure to
timely file a Federal income tax return unless the taxpayers show
that the failure was due to reasonable cause and not due to
willful neglect.
Section 7491(c) places the burden of production on the
Commissioner to show that the imposition of an addition to tax is
appropriate. To satisfy this burden, the Commissioner must
present sufficient evidence that the particular addition to tax
is appropriate. Higbee v. Commissioner, 116 T.C. 438, 446
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