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OPINION
Issue 1. Whether Petitioners Had Unreported Net Income From a
Sports Memorabilia Activity in the Amounts of $96,350 in 1991 and
$28,001 in 1992
Gross income includes income derived from business. See
sec. 61(a)(2). Gross income is construed broadly to include all
"accessions to wealth, clearly realized, and over which the
taxpayers have complete dominion." Commissioner v. Glenshaw
Glass Co., 348 U.S. 426, 431 (1955); Hawkins v. United States, 30
F.3d 1077, 1079 (9th Cir. 1994). Every person subject to income
tax is required to keep books and records that establish the
amount of gross income and deductions shown by that person on his
or her income tax return. See sec. 6001; sec. 1.6001-1(a),
Income Tax Regs.
When a taxpayer fails to keep adequate records, the
Commissioner is authorized to determine the existence and amount
of the taxpayer's income by any method that clearly reflects
income. See sec. 446(b); Holland v. United States, 348 U.S. 121
(1954); Mallette Bros. Constr. Co. v. United States, 695 F.2d
145, 148 (5th Cir. 1983); Webb v. Commissioner, 394 F.2d 366,
371-372 (5th Cir. 1968), affg. T.C. Memo. 1966-81. The
reconstruction of income need only be reasonable in light of all
surrounding facts and circumstances. See Palmer v. IRS, 116 F.3d
1309, 1312 (9th Cir. 1997); Giddio v. Commissioner, 54 T.C. 1530,
1533-1534 (1970); Schroeder v. Commissioner, 40 T.C. 30, 33
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