Charles L. Wynn, Jr. - Page 9

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          erroneous.6  Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115             
          (1933).                                                                     
          Unreported Income                                                           
               Section 6001 requires taxpayers to maintain sufficient                 
          records to determine their correct tax liabilities.  Petitioner             
          does not dispute that he did not maintain any books or records              
          for 1986 relating to his income-producing activities.  If a                 
          taxpayer fails to keep the required books and records, or if the            
          books and records maintained do not clearly reflect income,                 
          respondent is authorized by section 446 to reconstruct income in            
          accordance with a method that clearly reflects the full amount of           
          income received, Petzoldt v. Commissioner, 92 T.C. 661 (1989),              


          6  Respondent raised for the first time in the answer, as an                
          alternative position, that if the Court were to determine that              
          petitioner is not liable for the additions to tax for fraud for             
          the years at issue, petitioner would be liable for the additions            
          to tax for negligence on the entire underpayment for each of                
          those years, and not, as determined in the notice, only on the              
          portion of the underpayment attributable to certain determina-              
          tions in that notice that are discussed below.  Rule 142(a).  As            
          indicated supra note 2, respondent conceded at trial the addi-              
          tions to tax for fraud for 1986 and the deficiency in, and                  
          additions to, tax for 1987.  Respondent generally would have the            
          burden of proof on her alternative position in the answer with              
          respect to the additions to tax for negligence for 1986.  In                
          arguing the additions to tax for negligence on brief, respondent            
          does not make clear to the Court whether or not she is advancing            
          her alternative position that petitioner is liable for the                  
          additions to tax for 1986 on the entire underpayment for that               
          year.  In this connection, however, respondent's counsel advised            
          the Court in her opening statement before trial that, after                 
          respondent's concession of the additions to tax for fraud, no               
          issues remain in this case on which respondent has the burden of            
          proof.  Given the state of the record, we conclude that respon-             
          dent has abandoned her alternative position in the answer with              
          respect to the additions to tax for negligence for 1986.                    



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