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during the years in issue without any evidence of limitation on
their use. We are not persuaded by petitioner’s belated attempts
to disavow the lists of income items provided to respondent’s
agent during the audit of petitioners’ returns for 1992 and 1993.
Petitioners’ inability to prove their contentions is undoubtedly
of their own making.
Petitioners are required to maintain records from which
their tax liability may be ascertained; in the absence of
adequate books and records, respondent may use a reasonable
method, such as a bank deposits analysis, to reconstruct
petitioners’ income. See Estate of Mason v. Commissioner, 64
T.C. 651, 656, 658-659 (1975), affd. 566 F.2d 2 (6th Cir. 1977).
Respondent did so in this case. Contrary to petitioners’
contention, respondent does not have to show that legal fees
received during a taxable year were “earned” during the same
year. See Miller v. Commissioner, T.C. Memo. 1989-128, affd.
without published opinion 909 F.2d 509 (8th Cir. 1990). That
burden is on petitioners, and they have failed to meet it.
Section 7491(a), cited by petitioners, does not apply
because the examination was begun in 1996, prior to the effective
date of the burden of proof rule provided by the section. In any
event, the provisions of section 7491(a) would not help
petitioners’ case. See Higbee v. Commissioner, 116 T.C. __
(June 6, 2001).
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