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sources of income that are reasonably susceptible of being
checked. We have held, however, that the Commissioner is not
required to investigate leads where the taxpayer bears the burden
of proof. See Tunnell v. Commissioner, 74 T.C. 44, 57-58 (1980),
affd. 663 F.2d 527 (5th Cir. 1981). As previously discussed,
petitioners bear the burden of proving that the amounts of
deficiencies determined by respondent were incorrect.
Even if we were to assume that the lead-check rule were
applicable here in determining the validity of respondent’s use
of the net worth method for purposes of determining petitioners’
deficiencies, the existence of likely sources of taxable income--
namely, petitioners’ automotive and construction-related
businesses–-would temper the need for respondent to pursue leads
as to other potential nontaxable sources of income. See King v.
Commissioner, T.C. Memo. 1978-351. In any event, as described
below, the quality of the “leads” that petitioners allegedly
offered respondent is insufficient to convince us that
respondent’s use of the net worth method was arbitrary or
invalid, or that respondent erroneously determined that
petitioners’ unreported income was from taxable sources.
1. The 1994 and 1995 Records “Lead”
On brief, petitioners contend that respondent improperly
failed to investigate the “lead” represented by their 1994 and
1995 business records. This contention is in essence a
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