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receipts for 1995 is arbitrary.34 On the instant record, we
reject that contention. Petitioners refused to provide respon-
dent with any information or documentation during respondent’s
examination of petitioners’ 1995 joint return. Under such
circumstances, respondent was authorized to reconstruct petition-
ers’ income by any reasonable means which clearly reflects
income. See, e.g., Zuhone v. Commissioner, 883 F.2d 1317, 1326
(7th Cir. 1989), affg. T.C. Memo. 1988-142; Petzoldt v. Commis-
sioner, 92 T.C. 661, 686-687 (1989). On the record presented, we
find respondent’s method of reconstructing petitioners’ 1995
Schedule C gross receipts and the results generated by that
34In order to reconstruct petitioners’ 1995 Schedule C gross
receipts, respondent divided the total expenses reported in
petitioners’ 1994 Schedule C (i.e., $1,871,671) by the gross
profit (total net gross receipts (i.e., total gross receipts
reduced by returns and allowances) minus cost of goods sold)
reported in that schedule (i.e., $2,624,759). The resulting
quotient was 71.31 percent. The revenue agent then divided the
total expenses claimed in petitioners’ 1995 Schedule C (i.e.,
$1,973,107) by that percentage. The result ($2,766,943) was
determined to be the reconstructed Schedule C gross profit for
1995. Respondent determined that the difference (i.e., $890,719)
between that reconstructed gross profit of $2,766,943 and the
gross profit reported in petitioners’ 1995 Schedule C (i.e.,
$1,876,224) constituted petitioners’ unreported 1995 Schedule C
gross receipts. (In this connection, petitioners do not claim
any returns and allowances or cost of goods sold in excess of the
amounts of such items claimed in petitioners’ 1995 Schedule C.)
Pursuant to the foregoing method of reconstructing petitioners’
Schedule C gross receipts for 1995, respondent determined to
increase petitioners’ Schedule C gross receipts for that year by
$890,719.
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