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Agent Christenot substituted for the estimated housing expenses
listed in the BLS the actual mortgage payments made by petitioner
for the years in issue as determined from the above-mentioned
IRMF regarding petitioner. A copy of those statistics was
forwarded to petitioner with the statutory notice of deficiency.
Section 7602(a)(1) authorizes the Secretary to examine any
books, papers, records, or other data which may be relevant for
the purpose of ascertaining the correctness of any return.
Where, as here, the taxpayer refuses to cooperate in the
determination of his income, the Internal Revenue Service has
great latitude in determining a taxpayer's tax liability. Giddio
v. Commissioner, 54 T.C. 1530 (1970). Respondent may use one or
more of several indirect methods to reconstruct a taxpayer's
income. Sec. 446(b). One of the permitted methods, such as was
used in this case, relies on the BLS data. See Giddio v.
Commissioner, supra; Thomas v. Commissioner, T.C. Memo. 1996-492;
Moll v. Commissioner, T.C. Memo. 1987-39; Denson v. Commissioner,
T.C. Memo. 1982-360.
The Court of Appeals for the Ninth Circuit, to which an
appeal in this case would lie, considered issues similar to the
issues under discussion in this case in Edwards v. Commissioner,
680 F.2d 1268 (9th Cir. 1982). In Edwards, the taxpayers were
the former owners of an auto repair business. Prior to 1971,
they had filed Federal income tax returns. For the years 1971
through 1976, William Edwards filed "protest returns". On those
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