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living-–and, hence, net income-–of $16,766 for 1991 and $17,461
for 1992.
We have approved the Commissioner’s use of cost of living
statistics, such as BLS survey statistics, to reconstruct the
amount of a taxpayer’s income. We explained in Giddio v.
Commissioner, 54 T.C. 1530, 1533 (1970):
Where * * * 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. [Citation omitted.]
As noted earlier, respondent’s determinations are
presumptively correct. Rule 142(a). In cases involving the
Commissioner’s determination of unreported income, however, the
presumption of correctness may not attach if the notice of
deficiency is unsupported by any evidence. Schaffer v.
Commissioner, 779 F.2d 849, 858 (2d Cir. 1985), affg. in part and
remanding in part Mandina v. Commissioner, T.C. Memo. 1982-34.
Thus, in unreported income cases, imposition of the burden of
proof upon the petitioner requires that the “record must at least
link the taxpayer with some tax-generating acts”. Llorente v.
Commissioner, 649 F.2d 152, 156 (2d Cir. 1981), affg. in part and
revg. and remanding in part 74 T.C. 260 (1980). In the absence
of evidence linking the taxpayer with such acts, a notice of
deficiency will be found arbitrary, insofar as it covers periods
for which there is no evidence of direct involvement. Id.
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