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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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