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accrual accuracy analysis for Dayton's based on the analyses of
Target data. Even if this Court were to engage in that type of
speculation, our rejection of the analyses with respect to Target
renders that method of proof ineffectual. In addition,
petitioner presents evidence demonstrating that the aggregate
estimated shrinkage rates of Dayton’s for inventory periods
spanning the taxable year in issue are less than the verified
rates of shrinkage for the same periods. That evidence, without
more, does not provide a basis to evaluate clear reflection of
income for the taxable year in issue for the reasons set forth in
our discussion that follows of Dr. Seago's sales percentage
shrinkage analyses based on Target data.
Dr. Seago presents analyses that compare actual and
estimated shrinkage rates as a percentage of sales for physical
inventory periods (sales percentage shrinkage analyses). See
supra sec. VI.E.4. Those analyses were conducted at both the
store and Target-wide levels. Not only are we unimpressed by
Dr. Seago's results, we have reservations about his assumptions.
Dr. Seago's analyses compare results for inventory periods and
not the taxable year or any other taxable year. An identity of
results between actual and estimated shrinkage rates as a
percentage of sales for inventory periods does not tell us
anything about the relative distribution of losses from shrinkage
factors within those inventory periods. Thus, unless sales and
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