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"unreported income" item in each notice of deficiency represents
petitioner's cost of living during the respective year in issue.4
It is not clear, however, that the "unreported income" amounts
determined by respondent constitute a reasonable approximation of
petitioner's cost of living in years where petitioner has
stipulated or admitted to income from other sources in amounts
that may have been used to meet his cost of living.5 With these
considerations in mind, we review the evidence for each year.
1988
The parties have stipulated that petitioner received wages
of $14,239 and interest income of $13 in 1988. It has also been
stipulated that in 1987 petitioner purchased business property in
Cortland, Illinois (the Crazy Horse property), and operated the
Crazy Horse Saloon on these premises in 1987 and 1988. In
connection with the trial of this case, petitioner completed and
signed a 1988 Federal income tax return, on Schedule C of which
4 We note that respondent in this case did not provide the
supporting detail with respect to the BLS reconstruction that was
provided by the Commissioner in Giddio v. Commissioner, 54 T.C.
1530 (1970).
5 Respondent also relies on Diercks v. Commissioner, T.C.
Memo. 1996-345, a case in which we sustained determinations of
unreported income based on reconstructions from BLS data.
However, Diercks is distinguishable from some of the years at
issue in the instant case. In Diercks, the taxpayer denied
receiving income greater than $500 in each year, despite proof of
expenditures for living expenses that far exceeded that amount.
Here, petitioner has stipulated or admitted to income in some
years that could be sufficient to meet his living expenses.
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