Benjamin and Sallie Campfield - Page 14

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               Under the net worth method, income is computed by                      
          determining a taxpayer's net worth at the beginning and end of a            
          period.  The difference between the amounts is the increase in              
          net worth.  An increase in a taxpayer's net worth, plus his                 
          nondeductible expenditures, less nontaxable receipts, may be                
          considered taxable income.  Holland v. United States, supra at              
          125.                                                                        
               Where the Commissioner has determined a deficiency by using            
          the net worth method, we may adjust a determination of opening              
          net worth shown by the trial record to be unrealistic.  Hoffman             
          v. Commissioner, 298 F.2d 784, 786 (3d Cir. 1962), affg. in part            
          T.C. Memo. 1960-160; Baumgardner v. Commissioner, 251 F.2d 311              
          (9th Cir. 1957), affg. T.C. Memo. 1956-112; Potson v.                       
          Commissioner, 22 T.C. 912, 928-929 (1954), affd. sub nom.                   
          Bodoglau v. Commissioner, 230 F.2d 336 (7th Cir. 1956).  Any such           
          adjustments do not invalidate the presumption of correctness                
          attaching to other aspects of the Commissioner's deficiency                 
          determination if the determination was not arbitrary.  Hoffman v.           
          Commissioner, supra at 788.                                                 
               Respondent calculated petitioners' net worth for the years             
          in dispute, and we have attached the summary of respondent's                
          calculations as an appendix.  The parties agree on all but four             
          categories of respondent's net worth calculations.  We address              
          below only those categories in dispute.                                     






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