- 11 - deficiency was capricious and arbitrary.9 In support of its position, petitioner cites Portillo v. Commissioner, 932 F.2d 1128 (5th Cir. 1991), affg. in part, revg. in part and remanding T.C. Memo. 1990-68.10 In Portillo, the Commissioner determined that the taxpayer had unreported income by comparing the amount of income reported on a Form 1099 that had been issued to the taxpayer by a third party with the amount of income from the third party payor reported on the taxpayer’s Form 1040, U.S. Individual Income Tax Return. Id. at 1131. When the amounts did not match, the Commissioner concluded that the Form 1099 was accurate, even though the third party who submitted the Form 1099 could not substantiate the amount of income he allegedly paid. Id. The Commissioner determined that the taxpayer had received unreported income equal to the discrepancy between the Form 1099 amount and the amount reported on the taxpayer’s return, and we upheld the determination. Id. The Court of Appeals for the Fifth Circuit reversed, holding that before the Commissioner could make a determination that a taxpayer received unreported income, he 9Petitioner does not contend that sec. 7491(a), which shifts the burden of proof to the Commissioner if its requirements are met, applies, and the record does not contain sufficient evidence to establish that petitioner satisfies the sec. 7491(a) requirements. 10This case is appealable, barring a stipulation to the contrary, to the Court of Appeals for the Fifth Circuit. See sec. 7482(b)(1)(B).Page: Previous 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 NextLast modified: March 27, 2008