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participate cooperatively in the audit process or preparation
for trial.
Respondent's determinations in the notices of deficiency
are presumed correct, and the burden of proof rests with
petitioners to establish that such determinations are
incorrect. Rule 142(a). Respondent filed amended answers in
which increased deficiencies are asserted, and under the same
Tax Court Rule respondent bears the burden of proof as to these
increased amounts.
If a taxpayer fails to file a return, the Commissioner may
reconstruct the taxpayer's income using third party
information, and such calculation is presumptively correct.
Avery v.Commissioner, 574 F.2d 467, 468 (9th Cir. 1978), affg.
T.C. Memo. 1976-129. Furthermore, if a taxpayer fails to
produce business books and records, the Commissioner is
authorized to determine the taxpayer's income using the CPI in
conjunction with a past year's return. Edwards v. Commissioner,
680 F.2d 1268 (9th Cir. 1982), affg. an unreported Tax Court
Order.
Petitioners complain that Respondent's resort to third
party information and the use of the CPI is unfair because 1989
was a much better year for them than 1990 and 1991 due to the
collapse of the California real estate market. The fact that
the Court has no way of evaluating this contention is of
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