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his deductions and other offsetting amounts, see, e.g., United
States v. Bender, 218 F.2d 869, 871 (7th Cir. 1955), and, in the
case of a taxpayer who has failed to file a return or has shown
on his return no receipts from the activity, the assumption that
he, more readily than the Commissioner, has access to evidence of
deductions or other offsetting amounts makes the nonexistence of
those amounts a fair presumption, at least as an initial matter
and absent a satisfactory explanation of such nonexistence or the
production of some exculpatory evidence, Siravo v. United States,
377 F.2d 469, 474 (1st Cir. 1967).
We believe that rationale holds true here. The
considerations necessary to determine whether the sale of
merchandise (inventory) results in gross income from sales are
for present purposes similar to the considerations necessary to
determine whether the sale of investment property (which is in
question here) results in a gain. In the case of the sale of
inventory, there is no gross income unless the proceeds from the
sale exceed the cost of the goods sold, sec. 1.61-3(a), Income
Tax Regs., and, in the case of the sale of investment property,
there is no gain unless the amount realized on the sale exceeds
the adjusted basis of the property, sec. 1001(a). The terms
“cost of goods sold” and “adjusted basis” are terms of art that
denote the same thing; i.e., the measure of the taxpayer’s
unredeemed investment in an item of property (often the cost of
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