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Discussion
Respondent's reconstruction of petitioners' income for each
year in the notice of deficiency is presumed correct and the
burden is on petitioners to demonstrate otherwise. Rule 142(a);
Mallette Bros. Constr. Co. Inc. v. United States, 695 F.2d 145,
148 (5th Cir. 1983).
Petitioners contend that the method by which respondent
calculated petitioner's gross receipts is flawed for various
reasons. They argue that respondent has overestimated gross
receipts because of her failure to take into account: (1) Special
discounts and promotions offered by the Star Telegram; (2) the
time lag in processing each "stop" resulting in extra newspapers
that generated no revenues; and (3) a higher than allowed rate of
uncollectibles due to the nature of petitioner's route.
Petitioners further argue that respondent's use of only two
subscription rates and assumption that each "average" subscriber
paid for a full monthly subscription artificially inflates the
amount of gross receipts. Lastly, petitioners generally
criticize respondent's use of average "draws" arguing that the
"draw" numbers regularly fluctuate and do not lend themselves to
estimates using averages. In addition, petitioners argue that
their modest lifestyle is in accord with their reported income
and further demonstrates that respondent's determinations must be
erroneous and excessive.
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Last modified: May 25, 2011