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returns, he entered "Fifth Amendment" on most of the return
entries which required information necessary to determine the
taxpayer's tax liabilities.
On audit, the Commissioner determined that in each of the
years in issue, the taxpayers had received unreported income from
their auto repair business. Because the taxpayers refused to
make available to the Internal Revenue Service auditor any
information that would enable him to determine their income from
that business for the years in issue, the auditor estimated their
tax liabilities by adjusting the pertinent figures reported by
them on their 1970 Federal income tax return in conformance with
the percentage increase in the Consumer Price Index.
The taxpayers filed a petition with this Court. They
refused, however, to produce at trial the books and records of
their auto repair business that would enable the Court to
determine their Federal income tax liabilities for the years in
issue. This Court dismissed the case for failure to properly
prosecute and the taxpayers appealed.
On appeal, the taxpayers argued, inter alia, that the
Commissioner's use of the Consumer Price Index to determine their
tax liabilities was arbitrary and that this Court's dismissal of
their case for failure to properly prosecute violated their Fifth
Amendment privilege against self-incrimination.
In rejecting the taxpayers' argument that the Commissioner's
determination of their tax liabilities was arbitrary, the Court
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