- 14 - Commissioner, 979 F.2d 1176, 1178 (6th Cir. 1992), affg. T.C. Memo. 1991-320; Traficant v. Commissioner, 884 F.2d 258, 263 (6th Cir. 1989), affg. 89 T.C. 501 (1987); Calderone v. United States, 799 F.2d 254, 258 (6th Cir. 1986). A taxpayer must generally prove by a preponderance of the evidence that respondent’s determination is erroneous. Helvering v. Taylor, supra at 515; Traficant v. Commissioner, supra at 263; Calderone v. United States, supra at 258. Income is computed under the net worth method by determining a taxpayer's net worth at the beginning and end of a taxable year. The difference between those two amounts is the increase in the taxpayer’s net worth. This difference is increased by adding nondeductible expenditures, e.g., living expenses, and by subtracting gifts, inheritances, loans, and other nontaxable receipts. Holland v. United States, supra at 125; United States v. Giacalone, 574 F.2d 328, 330-331 (6th Cir. 1978). An increase in a taxpayer's net worth, plus his or her nondeductible expenditures, less nontaxable receipts, may be considered taxable income. Holland v. United States, supra. Petitioners argue primarily that respondent's use of the net worth method was inappropriate because, they assert, they maintained sufficient records as to their income. We disagree. First, as a point of fact, petitioners did not maintain sufficient records from which respondent could accurately computePage: Previous 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Next
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