- 9 - Sport was determined to have net income of $33,916 after subtracting expenses of $277,243 (.891 x $311,159) from the stipulated gross sales. Petitioner has offered no concrete evidence to establish either that his business diverged from that of the average bicycle retailer or that he incurred specific costs in excess of those taken into account by respondent’s method of reconstruction. Rather, petitioner has offered testimony, tangential at best, regarding his standard of living, on the premise that “My standard of living did not, has not, never has reflected the amount of income that they alleged, either originally or now”. He has also relied on unsupported assertions that his business operated at a loss, such as that in the following brief colloquy: THE COURT: All right. You went for 6 years without making any money? Is that what you’re saying? MR. COHEN: Yes, sir, absolutely. In these circumstances, we conclude that respondent has employed a reasonable method for reconstructing petitioner’s Schedule C income for 1986 and that petitioner has failed to carry his burden of showing such method to be in error. As the Court of Appeals for the Ninth Circuit has expressly stated: “Courts have long held that the IRS may rationally use statistics to reconstruct income where taxpayers fail to offer accuratePage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
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