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With regard to the deductions for casual labor and
insurance, we are not satisfied that the unavailability of the
records maintained by his accountant explains his failure to
substantiate these deductions. There are other reasonable means
that petitioner could have used to substantiate these deductions.
He could have called as witnesses the persons he employed, and he
could have obtained information from the insurance company. We,
therefore, sustain respondent’s disallowance of these deductions.
The remaining issue deals with the $8,000 reduction to
petitioner’s cost of goods sold. On his Schedule C, petitioner
reported gross receipts of $26,864 and cost of goods sold of
$13,569. The ratio between the gross receipts and cost of goods
sold is roughly 2:1. We note that in the Internal Revenue
Service “Statistics of Income Bulletin”, Summer 1998, Vol. 18,
No. 1, at 25, total gross receipts and cost of goods sold for
plumbing sole proprietorships for 1996 were $10.2 billion and
$5.2 billion, respectively, almost the identical 2:1 ratio as
shown by petitioner. We do not believe that there would be a
significant difference between 1995 and 1996. Respondent’s
reduction of $8,000, therefore, would appear to be out of line,
and, using our best judgment, we believe that the cost of goods
sold would be $11,569. See Cohan v. Commissioner, supra.
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