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the Commissioner. The Court of Appeals for the Seventh Circuit
disagreed. The court stated that shifting the burden of proof to
the Commissioner “would be tantamount to holding that skillful
concealment of income by failure to keep records and destruction
of the original documents from which income could be
reconstructed would be an invincible barrier to proof.” Id. at
102. The Court of Appeals for the Ninth Circuit ruled similarly
in Clapp v. Commissioner, 875 F.2d 1396 (9th Cir. 1989). There,
the court rejected a taxpayer’s argument that a significant
disparity between the amounts in a notice of deficiency and the
amounts in a stipulated judgment was proof that the
Commissioner’s determination was arbitrary. The court noted that
the discrepancies were simply the product of the taxpayer’s
refusing to cooperate with the audit. Id. at 1402; accord Am.
Fletcher Corp. v. United States, 832 F.2d 436, 442 (7th Cir.
1987) (Cudahy, J., concurring) (“Taxpayers are required to keep
adequate records to support their declaration of taxable income,
and have no grounds for protest if the Commissioner imposes a
workable accounting method when confronted with inadequate
records.”).
Petitioner asserts that respondent is required either to
introduce into evidence FNBC’s swap records or to advance
alternative computations in order to legitimize as other than
arbitrary or erroneous his determination as to the credit and
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