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income need only be reasonable in light of all surrounding facts
and circumstances. Giddio v. Commissioner, 54 T.C. 1530, 1533
(1970). The Commissioner is given wide latitude in determining
which method of reconstruction to apply when a taxpayer fails to
maintain adequate books and records. Petzoldt v. Commissioner,
92 T.C. 661, 693 (1989).
In this case petitioner neither filed Federal income tax
returns for the years in issue nor provided information with
respect to his business income. Respondent, however, linked
petitioner to his self-employed business of selling hearing aids
and administering hearing tests, and determined from third-party
sources that petitioner received taxable income for the years in
issue. In these circumstances respondent had broad latitude in
using the method based on the Bureau of Labor Statistics
expenditures to determine petitioner's income. That method was
specifically approved by this Court in Giddio v. Commissioner, 54
T.C. at 1533. There we sustained the Commissioner's
determination of a taxpayer's deficiency computed by using Bureau
of Labor Statistics data showing the normal cost of supporting a
family in the locality where he lived in order to arrive at
taxable income.
We disagree with petitioner's primary contention that
respondent's determination is arbitrary and excessive and that
therefore respondent bears the burden of proving that he had
taxable income.
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