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violation of Title 21, United States Code, Section 841(a)(1)."
Petitioner's plea constitutes an admission of guilt.
Second, evidence gathered during the criminal investigation
of Ronnie Chandler, petitioner, and the other individuals, as
well as evidence adduced during the subsequent criminal
prosecution, inculpates petitioner as involved in the drug
business. Such evidence also undoubtedly influenced his decision
to plead guilty to the tenth count of the indictment 2 days after
the criminal trial began.
Third, at the trial herein a third party testified that
petitioner had sold her marijuana and had admitted to her that he
had "played" with marijuana for many years before 1990.
We think that the foregoing matters suffice to establish a
rational basis upon which respondent could determine, as she did,
that petitioner was involved in the drug business during 1990,
and that he derived unreported income from such business during
that year.
Use of an indirect method to reconstruct income
Petitioners also argue that respondent's deficiency
determinations for 1989 and 1990 should not enjoy their usual
presumption of correctness because respondent was not justified
in reconstructing petitioners' income for those years using an
indirect method. Again, we disagree.
When a taxpayer fails to maintain adequate books and records
as required by section 6001, the Commissioner may reconstruct the
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