- 11 -
that clearly reflects income. Sec. 446(b); Meneguzzo v.
Commissioner, 43 T.C. 824, 831 (1965). Because petitioner failed
to produce any records, respondent used the CPI Rollover Method
to reconstruct petitioner's income for the years in issue. Under
this method, income is computed by multiplying the adjusted gross
income reported on the taxpayer's most recently filed return by
the increase in the CPI, as published by the U.S. Department of
Labor, for the year in issue. See Moore v. Commissioner, 722
F.2d 193, 196 (5th Cir. 1984), affg. T.C. Memo. 1983-20. Based
on her CPI calculations, respondent determined that petitioner
had unreported self-employment income of $28,631, $29,470,
$30,851, $32,256, and $33,021 for 1988, 1989, 1990, 1991, and
1992, respectively.
Respondent has established that petitioner engaged in a tax
consulting practice during 1988 and 1989. During these years,
Ms. Boals paid petitioner $150 per hour for his services.
Petitioner rented office space from Hercules & Lavery and
referred approximately a dozen of his clients to the firm during
this same period. In 1988, Virginia Shaw paid petitioner a
$5,000 retainer to prepare her 1987 Federal income tax return.
In addition, petitioner requested an extension of time to file
Ms. Shaw's return, because he was behind on audits and Tax Court
cases. Moreover, petitioner testified that he was a tax
consultant during 1988 and 1989, and he knew that he had to file
returns for these years. Therefore, we conclude that respondent
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Next
Last modified: May 25, 2011