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The use of indirect methods to reconstruct income by the IRS is limited by Code Section 7 6 0 2 ( e ) which prohibits

The use of indirect methods to reconstruct income by the IRS is limited by Code Section 7602(e) which prohibits financial status or economic reality techniques to determine the existence of unreported income unless the IRS Agent has a likelihood of such unreported income. The missing phrase is that there i a sneaking suspicion a good faith belief a reasonable suspicion probable cause to believe a reasonable indication a hunch

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