Briefly explain the defenses established by the courts to protect against abuse of evidence from net ...

• Net worth method: The user must establish a beginning net worth with reasonable certainty, consider all relevant leads, and establish a likely source of funding for the increase in net worth. Moreover, the defense is given wide latitude in presenting evidence of beginning net worth.
• Source and application of funds: The user must establish beginning cash on hand with reasonable certainty, and expenditures cannot be speculative or arbitrary.
• Percentage markup: The use of reliable percentages (ratios) and a supportable base are required. Even so, the IRS cautions against the use of this method, and no judicial precedent has been identified or cited.

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