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that clearly reflects income, including an indirect method. Sec.
446(b); Holland v. United States, 348 U.S. 121 (1954). The
reconstruction need only be reasonable in light of all facts and
circumstances. Clayton v. Commissioner, 102 T.C. 632, 643
(1994); Giddio v. Commissioner, 54 T.C. 1530, 1532 (1970).
The Commissioner is authorized to use bank deposit records
to reconstruct a taxpayer’s income. Clayton v. Commissioner,
supra at 645. Bank deposits are prima facie evidence of income.
Id. In calculating a taxpayer’s taxable income, the Commissioner
must take into account any deductible expense of which he has
knowledge. Id. at 645-646 (citing DiLeo v. Commissioner, 96 T.C.
858, 868 (1991), affd. 959 F.2d 16 (2d Cir. 1992)).
The Commissioner’s use of data compiled by BLS is an
acceptable and reasonable method of reconstructing net income.
Pollard v. Commissioner, 786 F.2d 1063 (11th Cir. 1986), affg.
T.C. Memo. 1984-536; Giddio v. Commissioner, supra. Statistics
from BLS provide an estimate of the taxpayer’s net business
income and take into account business deductions. Sherrer v.
Commissioner, T.C. Memo. 1999-122, affd. 5 Fed. Appx. 719 (4th
Cir. 2001).
The examiner sought to reconstruct petitioners’ income and
expenses using bank records only after petitioners could not
substantiate their income and expenses. After the examiner
totaled the deposits into petitioners’ bank accounts in 1996, she
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