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Commissioner, 43 T.C. 824, 831 (1965). When the Commissioner has
evidence of taxable income but does not have information
available to ascertain the amount of such income, the
Commissioner may use BLS data to determine that the taxpayer had
income at least equal to the normal cost of living. Giddio v.
Commissioner, 54 T.C. 1530, 1533 (1970).
Prior to issuing notices of deficiency, respondent did not
contact petitioners and did not obtain any evidence linking
petitioners to an income generating activity relating to 1993.
Nevertheless, respondent proceeded to use BLS data to reconstruct
petitioners' 1993 income. Therefore, respondent's determinations
relating to petitioners' 1993 tax years are arbitrary, and
respondent bears the burden of coming forward with evidence to
establish the existence and amount of any deficiency. Jackson v.
Commissioner, supra at 401; cf. Giddio v. Commissioner, supra
(holding that it is not arbitrary for the Commissioner to use BLS
data to reconstruct a taxpayer's income when the Commissioner has
evidence of taxable income).
Respondent has failed to present sufficient evidence to
establish the existence and amount of the deficiencies relating
to 1993. Although Mr. Cujas testified that he was self-employed
as a physical therapist during 1993, respondent has failed to
establish the amount of funds that Mr. Cujas may have received
during 1993 for such services. Therefore, respondent has failed
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