- 12 - States, 348 U.S. 121, 132 (1954). The Commissioner’s use of the net worth method may be valid even though the Commissioner did not properly recognize the taxpayer’s opening net worth, so long as the determination was not arbitrary. Hoffman v. Commissioner, 298 F.2d 784, 786 (3d Cir. 1962); Baumgardner v. Commissioner, 251 F.2d 311 (9th Cir. 1957); Bodoglau v. Commissioner, 230 F.2d 336 (7th Cir. 1956). Respondent was not arbitrary in applying the net worth plus expenditures method here. D. Whether Petitioners are Liable for Fraud Without Consideration of the Deemed Facts In our prior opinion, we considered the deemed facts and the entire record in holding that respondent clearly and convincingly proved that petitioners are liable for the addition to tax for fraud under section 6653(b) for 1975, 1976, and 1977. Estate of Spear v. Commissioner, T.C. Memo. 1993-213 (slip. op. at 55-56). The mandate of the Court of Appeals instructs us not to treat respondent as having made a prima facie showing with respect to the deemed facts as a sanction for petitioner's failure to testify at trial. This changes our analysis significantly. We no longer find as facts the allegations in subparagraphs k, l, o, p, r, s, t, u, v, w, y, aa, ab, ac, ad, and ae of paragraph 7 of respondent's amended answer because they are not adequately supported by the record.1 Assertions in the 1 Paragraphs k, l, o, p, r, s, t, u, v, w, y, aa, ab, ac, (continued...)Page: Previous 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Next
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