Janet A. Phillips - Page 5
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burden of proof to the Commissioner in specified circumstances,
petitioner did not satisfy the prerequisites under section
7491(a)(1) and (2) for such a shift.
In unreported income cases, the Commissioner in some
circumstances has been required to show a minimal evidentiary
foundation for the determined deficiencies, which may consist of
evidence linking the taxpayer to an income-producing activity.
See Williams v. Commissioner, 999 F.2d 760, 763-764 (4th Cir.
1993), affg. T.C. Memo. 1992-153. If the Commissioner introduces
some evidence that the taxpayer received unreported income, then
the burden shifts to the taxpayer to show by a preponderance of
the evidence that the deficiency was arbitrary or erroneous.
Hardy v. Commissioner, 181 F.3d 1002, 1004 (9th Cir. 1999), affg.
T.C. Memo. 1997-97.
Section 61(a) specifies that, “Except as otherwise
provided”, gross income includes “all income from whatever source
derived”. Wages and dividends are both listed among the forms of
income within the definition of section 61(a). Sec. 61(a)(1),
Respondent has shown an evidentiary foundation with respect
to the $52,327.73 in unreported wage income and $430 in
unreported dividend income determined in the attachment to the
notice of deficiency. In that regard, the parties have
6 Wages are referred to in sec. 61(a)(1) as “Compensation
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Last modified: March 27, 2008