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28, 1992, to October 12, 1993, petitioner drove a 1992 Chevrolet
Caprice that he leased from Yellow Cab Company.
Petitioner was granted permanent resident alien status on
September 25, 1996, by the U. S. Department of Justice
Immigration and Naturalization Service.
The first issue for decision is whether petitioner had
unreported Schedule C gross receipts in the amounts determined by
respondent. Respondent's determinations in the statutory notice
of deficiency are presumed to be correct, and petitioner bears
the burden of proving otherwise. Rule 142(a); Welch v.
Helvering, 290 U.S. 111, 115 (1933).
All taxpayers are required to maintain records sufficient to
determine their correct tax liability. Sec. 6001. Such records
must be retained by the taxpayer "so long as the contents thereof
may become material in the administration of any internal revenue
law." Sec. 1.6001-1(e), Income Tax Regs.
If a taxpayer keeps no records or it appears that records
that are kept do not clearly reflect income, respondent may
reconstruct income under a method which does clearly reflect
income. Sec. 446(b). Once it is established that a
reconstruction is necessary, respondent has great freedom in the
method of reconstruction used. Catalano v. Commissioner, 81 T.C.
8, 13 (1983), affd. without published opinion sub nom. Knoll v.
Commissioner, 735 F.2d 1370 (9th Cir. 1984).
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