On June 9, 2020, the Tax Court issued a Memorandum Opinion in the case of Flume v. Commissioner (T.C. Memo. 2020-80). The primary issue before the court in Flume v. Commissioner was whether the petitioners had subpart F income. Burden of Proof in Unreported Income Cases as in Flume v. Commissioner Generally, the IRS’s determinations regarding income set forth in a notice of deficiency are presumed correct and the taxpayer bears the burden of proving otherwise. See Tax Court Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933). However, in cases (such as this one) involving unreported income, the IRS bears the burden of first producing or providing “some reasonable foundation” that connects the taxpayer with the income-producing activity. See Blohm v. Commissioner, 994 F.2d 1542, 1549 (11th Cir. 1993), aff’g T.C. Memo. 1991-636; Portillo v. Commissioner, 932 F.2d 1128, 1133 (5th Cir. 1991), aff’g in part, rev’g in…