- 14 -
of the taxpayers’ income for those years. Id. The
Commissioner’s reconstruction was based on certain average income
statistics and the inference that, since the taxpayers were able
to survive from the end of year 1 to year 4, they must have had
some income during the intervening 2 years. Id. The taxpayers
did not suggest that they had alternative means of support in the
absence of income for the years in question, and the court found
the Commissioner’s inference to be reasonable. Id. The
taxpayers argued, however, that, under the Weimerskirch line of
cases, the Commissioner was compelled to discover the exact
source of the income that he would attribute to them. Id. The
Court of Appeals disagreed, stating that, when the reasonable
inference made by the Commissioner was coupled with the
information linking the taxpayer-husband to wages for at least a
part of the 4-year period, the minimal evidentiary foundation
necessary to support the presumption of correctness had been
established. Id.
Finally, in Edwards v. Commissioner, 680 F.2d 1268 (9th Cir.
1982), the Court of Appeals upheld the presumption of correctness
even though no specific income was documented, because the
taxpayers there had conceded that they owned an income-generating
auto repair business during the years at issue.
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