-16-
qualifications, as well as all other credible evidence in the
record. We are not bound by an expert's opinion. We may accept
or reject expert testimony when in our best judgment, based on
the record, it is appropriate to do so. While we may choose to
accept an expert's opinion in its entirety, we may also be
selective in the use of any portion of that opinion. See Seagate
Tech., Inc. & Consol. Subs. v. Commissioner, 102 T.C. 149, 186
(1994), and the authorities cited therein.
The only evidence petitioner offered to support his claim
that he paid hundreds of thousands of dollars of business
expenses in cash in 1989-92 was the report and testimony of
Mr. Sager. As we explained, Mr. Sager neither identified any
expenses paid by petitioner in cash, nor attempted to calculate
petitioner's actual receipts, expenses, or taxable income for any
of the years in issue. Instead, Mr. Sager tried to estimate
petitioner's income, by deriving a single gross profit percentage
(11.14 percent) from a few bid sheets assertedly used by
petitioner, and by applying that percentage to petitioner's
stipulated gross receipts for each year. Because there is no
evidence that the amounts on the bid sheets bear any relation to
petitioner's actual receipts, cost, or income from any actual
plumbing job during the years in issue, we give the estimates of
petitioner's income based on those sheets little weight.
Mr. Sager did try to support his estimates by comparing them
to some published financial ratios for the plumbing industry.
However, Mr. Sager did not explain how or why the businesses that
Page: Previous 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 NextLast modified: May 25, 2011