- 19 -
Finally, we think that Palmer v. United States, 116 F.3d
1309 (9th Cir. 1997), provides added authority for our decision.
In Palmer, the Commissioner had established the taxpayer’s
income-earning capacity but had no information as to income
earned during the middle 2 of the 4 years in question. The
Commissioner reconstructed the taxpayer’s income for the middle
2 years using average income statistics and the inference that
the taxpayer had survived the middle 2 years on income earned
during those years. Given the taxpayer’s failure to suggest an
alternative means of support, the Court of Appeals thought the
Commissioner’s inference to be reasonable. That reasonable
inference, together with the link the Commissioner had shown to
an income-earning capacity, provided the minimal evidentiary
foundation required by the Court of Appeals. Here, we have found
that petitioner owned rental real estate both before and after
the years in question. Petitioner has not suggested an
alternative means of support during the intervening years, so we
think it a reasonable inference that she survived those years
using income earned during them. That reasonable inference,
coupled with her income-earning capacity (from rental real
estate), provides a minimal evidentiary foundation linking
petitioner to an income-producing activity.
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