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Subtracting the $653,164 reported by petitioner, respondent
arrived at unreported coupon and buy-down income of $242,666
($895,830 - $653,164). Despite the fact that respondent’s
calculation reflected almost twice as much unreported income as
the $124,684 amount determined originally, respondent does not
seek an increased deficiency. Petitioner argues that
respondent’s alternate calculation of coupon and buy-down income
is a new theory raised for the first time on brief, that it
violates principles of fair play and justice, and it should not
be considered by the Court. Respondent asserts that the trial
was a de novo proceeding, and the administrative record is
irrelevant.
Respondent’s calculation is not a new theory. It is merely
a mathematical analysis of evidence before the Court and offered
in support of respondent’s determination. Petitioner’s dilemma
here is one of his own making. On the basis of the state of
petitioner’s records, neither he nor respondent may properly
substantiate his income and/or establish that the determination
was in error. Petitioner was well aware of his obligation to
maintain adequate records and knowingly failed to do so.
Petitioner devotes much of his brief to criticizing the
means by which respondent arrived at his determination and/or
supplementary calculation. This criticism focuses on the lack of
adequate documentation used by respondent in the determination
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