- 76 -
not account for the circumstances that the Johnson family members
frequently lived and dined together in a communal lifestyle
typical of their gypsy heritage; Frank and Katherine were not
able to drive but relied on Larry, Ronnie, and Sylvia for their
transportation; they were illiterate; they did not own life
insurance; and they did not participate in a retirement plan.
Additionally, petitioners contend that, in the source and
application of funds analysis for Sylvia, respondent failed to
adjust the BLS amounts to reflect that she lived with Frank and
Katherine for the years 1985 through August 1990.
Under certain circumstances, courts have found reasonable
respondent’s use of data compiled by the BLS to reconstruct
income or to estimate personal living expenses. See, e.g.,
Pollard v. Commissioner, 786 F.2d 1063, 1066 (11th Cir. 1986),
affg. T.C. Memo. 1984-536; Giddio v. Commissioner, 54 T.C. at
1532. The rationale for use of BLS data is that “[w]here * * *
there is evidence of taxable income but no information can be
acquired to ascertain the amount of such income, we do not think
it is arbitrary for the Commissioner to determine that the
taxpayer had income at least equal to the normal cost of
supporting his family.” Giddio v. Commissioner, supra at 1533.
Unquestionably, the Johnson family members incurred personal
living expenses during the years in issue. Frank and Katherine
did not maintain checking accounts or provide to respondent other
Page: Previous 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 NextLast modified: May 25, 2011