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method for computing * * * [the taxpayer's] true income."
Schroeder v. Commissioner, T.C. Memo. 1989-110 (held that the use
of income figures listed on invalid Federal income tax returns
was a reasonable method of reconstructing the taxpayer's income);
see also Hill v. Commissioner, T.C. Memo. 1995-136, affd. without
published opinion 86 F.3d 1155 (6th Cir. 1996); Schroeder v.
Commissioner, T.C. Memo. 1986-583. Therefore, respondent's use
of this method of reconstruction was well within the discretion
of respondent. Sec. 446(b).
At trial, respondent also introduced summaries of numerous
checks drawn on FCE's account, which list Ms. Fischer as the
payee. Ms. Fischer identified the checks which were cashed for
petitioner. These checks totaled $33,746.01 in 1988, $34,018.99
in 1989, and $6,759.86 in 1990. These amounts exceed the income
reported by petitioner on his delinquent returns for these
respective years. We found Ms. Fischer's testimony persuasive
and, consequently, find that petitioner received income during
1988, 1989, and 1990 in amounts greater than that reported on his
Federal income tax returns for these years.
Respondent also presented evidence that petitioner received
unreported income, including checks written on PCG's corporate
account during 1990 and 1991, which list petitioner as the payee.
These checks totaled $39,219.91 in 1990 and $82,162.80 in 1991.
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