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needed “predicate evidence supporting * * * [his] determination.”
Id. at 1133. The Court of Appeals concluded that the
Commissioner could not simply rely on a Form 1099 in making his
determination when the taxpayer contested the accuracy of the
Form 1099.
This case is distinguishable from Portillo. Respondent did
not determine that petitioner had unreported income, nor did he
arbitrarily attribute veracity to the statement of a third party
when making his determination. Respondent used the Forms 5472
that petitioner filed with its amended income tax returns to
determine that petitioner was liable for withholding taxes.
Petitioner’s Forms 5472 reported interest paid to GXE, a Hong
Kong corporation that did not appear to satisfy the residency
requirements for favorable tax treatment under the China
Agreement.11
Petitioner argues, however, that respondent was on notice
because its Forms 5472 reported two loans, one of which was made
by GITIC, a Chinese corporation that is exempt from U.S. income
tax under the China Agreement. Petitioner alleges that it gave a
copy of its September 8, 1998, letter containing a summary of
interest paid during 1995 and 1996 on the GITIC and GXE loans to
11The parties do not dispute that Hong Kong was not a part
of China during the years in issue. The Court takes judicial
notice that Hong Kong was a crown colony of the United Kingdom
until it became a Special Administrative Region of the People’s
Republic of China on July 1, 1997. See Fed. R. Evid. 201.
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