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can show his expenditures were made from some
nontaxable source of funds. * * *
A deficiency based upon the source and application of funds
method is presumptively correct, and the burden of proof is on
the taxpayer to prove otherwise. Rule 142(a). A taxpayer may
meet this burden by proving that assets were on hand at the
beginning of the taxable period with which to make the
expenditures, that amounts received during the year were
nontaxable, or that someone else made the expenditures. Id. at
930-931.
In this instance, respondent used the average living
expenses of one person, as provided by the Bureau of Labor
Statistics (BLS), as a basis for determining that petitioner's
income for the taxable year 1994 included the cost of supporting
herself. See Denson v. Commissioner, T.C. Memo. 1982-360
(discussing the Commissioner's reliance on BLS tables). We have
previously approved the Commissioner's use of BLS data when
reconstructing a taxpayer's income. See Giddio v. Commissioner,
54 T.C. 1530, 1533 (1970). Nevertheless, if evidence exists
which indicates that a taxpayer's living expenses for the taxable
year in question were less than the average living expenses
provided in the BLS tables, we may modify the Commissioner's
reconstruction under the source and application of funds method
to account for that difference. Denson v. Commissioner, supra.
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