Ernest L. and Kathleen Newsome - Page 12

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                  Respondent argues that her estimates are as accurate as                              
            possible, given the information that she had at the time.  If                              
            there are any problems in her estimates, respondent suggests that                          
            the problems were caused by petitioner's own record keeping                                
            failures.  For the following reasons, we agree with respondent.                            
                  Taxpayers have the obligation to maintain sufficient books                           
            and records in order to allow for the determination of income and                          
            expenses, and such books and records are to be kept available for                          
            inspection by respondent.  Sec. 6001; sec. 1.6001-1(e), Income                             
            Tax. Regs.  There is some dispute whether petitioners produced                             
            any books and records for respondent's review during the                                   
            examination stage, although we find it unlikely that they did.                             
            It is clear, however, that books and records were kept, but for                            
            reasons unexplained, petitioners did not produce them at trial.                            
            Absent such books and records, we review respondent's method of                            
            reconstructing petitioners' income not so much for precision, but                          
            for reasonableness under the circumstances.  Holland v. United                             
            States, 348 U.S. 121 (1954); Giddio v. Commissioner, 54 T.C.                               
            1530, 1533 (1970).  Applying this standard of review, none of                              
            petitioners' attacks upon respondent's method has merit.4  While                           

            4We disagree with petitioners' contention that regular                                     
            fluctuations in the number of "draws" renders the use of averages                          
            invalid.  Petitioners have not called our attention to any                                 
            statistical principles that support this proposition, and given                            
            the intended use of such averages, the opposite seems obvious to                           
            us.  We also disagree with petitioners' assertion that the rate                            
            of uncollectibles respondent used was too low.  The amount was                             
            the highest rate provided by the Star Telegram.  We are also                               

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