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T.C. Memo. 1996-383, affd. without published opinion 133 F.3d 906
(2d Cir. 1997).
Respondent’s 1989 Income Reconstruction for Petitioner Husband
Respondent’s net worth computations in this civil proceeding
were derived directly from the criminal net worth computation.
In each case, respondent assigned petitioner husband a 1989
opening net worth of zero. The record does not reveal
respondent’s factual basis, if any, for this determination.5
Given that petitioner husband was self-employed in a disc jockey
business in 1989, however, an opening net worth of zero is
suspect.
Respondent’s 1989 net worth computation purports to relate
solely to petitioner husband’s unreported income, yet is based on
inconsistent inclusions of petitioner husband’s and petitioner
wife’s incomes, assets, and expenditures. For example, the 1989
net worth computation counts among petitioner husband’s assets
two automobiles that petitioners bought together in the name of
petitioner wife. Similarly, the 1989 net worth computation takes
5 As far as is revealed by the record, petitioner husband
was under criminal investigation for tax evasion only for taxable
year 1990. If so, the only relevance of the 1989 criminal net
worth computation would be to establish petitioner husband’s 1989
ending net worth, which was used as his opening net worth in the
1990 criminal net worth computation. Because the 1989 opening
net worth would be of little or no consequence to the 1990
criminal net worth computation, it is inferable that respondent
merely assumed a zero opening net worth for 1989, without any
investigation. Such an inference is not contradicted by any
evidence in the record.
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