IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 19-60086

Summary Calendar

ALEJANDRO HERNANDEZ, JR.; EDITH G. ROMAN,

Petitioners-Appellants

v.

COMMISSIONER OF INTERNAL REVENUE

Respondent-Appellee

Appeal from a Decision of the

United States Tax Court

Tax Court No. 3069-17

Before CLEMENT, ELROD, and OLDHAM, Circuit Judges.

PER CURIAM:*

Alejandro Hernandez, Jr. and Edith G. Roman appeal a decision of the 

Tax Court denying a motion to shift the burden of proof to the Commissioner 

of Internal Revenue (“Commissioner”) and holding that there was a deficiency 

in taxes due in the amount of $5,4101 for taxable year 2014. We affirm.

* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not 

be published and is not precedent except under the limited circumstances set forth in 5TH 

CIR. R. 47.5.4.

1 The Commissioner had also initially assessed an accuracy-related penalty of $1,082 

but conceded this penalty in its pretrial memorandum to the Tax Court; accordingly, the Tax 

Court held for Appellants with respect to the accuracy-related penalty.

United States Court of Appeals

Fifth Circuit

FILED

July 28, 2020

Lyle W. Cayce

Clerk

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No. 19-60086

2

Appellants timely filed a 2014 tax return that included a Schedule C 

claiming $33,774 in business-related deductions. Appellants were notified in 

August 2016 that their return had been selected for examination. Following 

examination, the Commissioner issued a deficiency notice disallowing all 

$33,774 in deductions that Appellants had claimed on their Schedule C and 

increasing Appellants’ income by $1,136 based on a cancellation of debt 

reported on a Form 1099-C by Department Stores National Bank. 

Appellants argue that the process provided during the examination was 

inadequate and that the Tax Court erred in failing to shift the burden of proof 

to the Commissioner at trial. Appellants, relying heavily on this court’s 

decision in Portillo v. Commissioner of Internal Revenue, argue that the 

Commissioner’s deficiency determination is a “‘naked’ assessment without any 

foundation whatsoever.” 932 F.2d 1128, 1133 (5th Cir. 1991) (quoting United 

States v. Janis, 428 U.S. 433, 442 (1976)).

“[We] review[] decisions of the Tax Court using the same standards we 

use to review the decisions of district courts. We review findings of fact for 

clear error and questions of law de novo.” Williams v. Comm’r, 795 F. App’x 

920, 924 (5th Cir. 2019) (per curiam) (citing Estate of Duncan v. Comm’r, 890 

F.3d 192, 197 (5th Cir. 2018)). 

Appellants’ arguments with respect to the conduct of their examination 

are meritless. The Tax Court found Appellants’ allegations of misconduct 

against the examiner to be unsubstantiated. We find no evidence indicating 

that this finding was clear error. Regardless, the law is well-settled that “the 

presumption of correctness generally prohibits a court from looking behind the 

Commissioner’s determination even though it may be based on hearsay or 

other evidence inadmissible at trial.” Portillo, 932 F.2d at 1133; see also 

Greenberg’s Express, Inc. v. Comm’r, 62 T.C. 324, 327 (1974) (“[T]his Court will 

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not look behind a notice of deficiency to examine . . . the propriety of 

respondent’s motives or of the administrative policy or procedure involved in 

making his determinations.”).

The exception to this presumption of correctness, upon which Appellants 

rely, is where the “government’s assessment falls within a narrow but 

important category of a ‘“naked” assessment without any foundation 

whatsoever.’” Portillo, 932 F.2d at 1133 (quoting Janis, 428 U.S. at 442). “[A] 

court need not give effect to the presumption of correctness in a case involving 

unreported income if the Commissioner cannot present some predicate 

evidence supporting its determination.” Id. Appellants argue that the 

Commissioner relies solely on the 1099-C filed by Department Stores National 

Bank and that a deficiency notice that relies solely on a 1099-C is always a 

“naked” assessment. 

This argument is factually mistaken. The Commissioner did not rely 

solely on the 1099-C. The presumption of correctness is only rebutted where 

“the Commissioner cannot present some predicate evidence supporting its 

determination.” Id. Whereas, in Portillo, the “Commissioner merely matched 

[the] form 1099 with Portillo’s Form 1040 and arbitrarily decided to attribute 

veracity to [the 1099],” here, the Commissioner conducted further inquiry and 

did “attempt to substantiate the charge of unreported income by some other 

means.” Id. at 1133–34. The Commissioner in this case procured a follow-up 

affidavit from Department Stores National Bank attesting to the veracity of 

the 1099-C, matched the debt to a Macy’s credit card loan in Hernandez’s 

name, and produced an account statement verifying that the balance on the 

loan at the time the debt was allegedly cancelled was equal to or greater than 

the amount cancelled. Aside from their original form 1040, Appellants refused 

to produce any contrary evidence, including a specific denial that the debt had 

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been cancelled. As such, the notice of deficiency is not a naked assessment 

with respect to the $1,136 of cancelled debt and the Tax Court did not err in 

denying Appellants’ motion to shift the burden to the Commissioner.

With respect to the Schedule C deductions, Appellants’ burden shifting 

argument is inapposite. “The burden of overcoming the presumption of 

correctness in a deduction case properly rests with the taxpayer, who is the 

best source of information for determining entitlement to the claimed 

deductions.” Sealy Power, Ltd. v. Comm’r, 46 F.3d 382 (5th Cir. 1995); see also 

Portillo, 932 F.2d at 1134 (“The taxpayer clearly bears the burden of proof in 

substantiating claimed deductions.”). The Tax Court went to great lengths to 

elicit some scintilla of evidence, whether documentary or testamentary, to 

support the claimed deductions, but Appellants refused to provide any 

substantiation for their claimed Schedule C deductions. They refused to testify 

under oath before the Tax Court and provided neither documentation nor any 

other evidence to support their claims. Appellants “failed to fulfill [their] 

statutory obligation to maintain adequate records of [their] business 

expenditures,” and thus the Tax Court correctly found them liable for taxes 

related to disallowed Schedule C deductions. Portillo, 932 F.2d at 1135 (citing

26 U.S.C. § 6001). 

The judgment of the Tax Court is AFFIRMED.

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