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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).
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