- 17 - 93 (3d Cir. 1928) (approving assertion of a deficiency based upon the Commissioner's "observation of earnings made and taxes paid by a corporation in a like business"), affg. 6 B.T.A. 570 (1927); Giddio v. Commissioner, supra at 1532 (approving determination of taxable income based upon Bureau of Labor Statistics report of average cost of raising a family in New York).3 III. Petitioners' Evidence of Income In this case, respondent had no quarrel with the amount of petitioners' costs or expenses of operating Nick's Liquors. Respondent's differences with petitioners instead involve the amount of their gross profit margins. As we have held, petitioners have failed to show that respondent's determinations are arbitrary or unreasonable. Accordingly, the presumption of correctness that attaches to respondent's determinations remains in force. Harbin v. Commissioner, 40 T.C. 373, 376 (1963). Petitioners thus bear the burden of proving that respondent's determinations were erroneous. To some extent, they have succeeded. At trial, petitioners presented sufficient evidence 3 Our cases reflect a number of instances approving respondent's use of markup percentages based upon third-party sources to determine taxable income. See, e.g., Estate of Shuman v. Commissioner, T.C. Memo. 1995-327 (use of gasoline station markups based upon publications of Department of Energy and Oil and Gas Journal plus competitors' prices); Biggs v. Commissioner, T.C. Memo. 1985-303 (use of percentage markup based upon advice of local plumbers' unions); Howse v. Commissioner, T.C. Memo. 1974-225 (use of percentage markup based upon reports of National Sporting Goods Association).Page: Previous 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 Next
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