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illegal activity. While it is by no means clear that
respondent bears such a burden in this case, there is ample
evidence that Beaufort Leaf received the unreported income
determined by respondent for 1990 and 1991. Respondent
determined the unreported income for 1990 on the basis of
the Forms MQ-79 filed by the partnership for that year.
Respondent determined the unreported income for 1991 on the
basis of checks made payable to Beaufort Leaf and given to
the partnership's managing partner. Petitioners admit
that they were partners in Beaufort Leaf and as partners
received withdrawals of moneys from the partnership. In
light of those facts, which are not disputed, there is no
basis to conclude that there is an inadequate evidentiary
foundation for respondent's determination of unreported
income in the subject notices of deficiency or that the
notices of deficiency are arbitrary or without rational
foundation. Cf. Williams v. Commissioner, 999 F.2d 760
(4th Cir. 1993); Portillo v. Commissioner, 932 F.2d 1128
(5th Cir. 1991).
Substantiation of Purchases
We turn to the second issue. Petitioners take the
position that respondent erred in reducing Beaufort Leaf's
cost of goods sold by disallowing purchases in the amount
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