The Service may use indirect methods to determine the taxable income of a taxpayer whose spending exceeds his or her sources of funds:

a. if the taxpayer has reliable books and records and proof exists that he or she received a large inheritance in the current tax year.

b. if the taxpayer has reliable books and records, and they show the taxpayer adequately reported his or her taxable income.

c. if the taxpayer offers books and records for inspection that are of questionable value and his her only explanation offered for excessive spending is a cash horde.

d. All of the above.