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1985, 1986, and 1987. Petitioners contend that respondent's
determinations are arbitrary. We disagree.
Day did not give respondent's agent a net worth statement as
requested. Respondent's agent gathered evidence to compute
petitioners' net worth. He reviewed financial statements that
petitioner-husband gave to banks to obtain loans. He learned
that petitioners paid $45,002 in cash for a motor home in January
1983, made a $100,000 cash downpayment on the Glenstone property
in April 1983, and made other large cash expenditures in 1983.
Respondent's agent concluded that petitioners paid the first two
large expenses from a cash hoard and the rest from their earnings
in 1983. He concluded that petitioners had $140,000 in cash on
December 31, 1982, and that it came from the Tokyo Saunas.
Petitioners contend that respondent's determination about
their income in 1983 is arbitrary because respondent determined
that their income with only two saunas operating was larger than
their income in later years with three saunas operating. We
disagree that this makes respondent's determination arbitrary.
The only documentary evidence showing the number of employees
petitioners had are the daily sheets that were not burned. They
show that petitioners had 10 employees who worked 35 days in 1983
and 8 employees who worked 28 days in 1987. The number of
employees at each sauna appears to have varied from one to five
during the years in issue. The record does not show how many
employees worked at each sauna in each year in issue. Thus, the
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