The New York Court of Tax Appeals has ruled that the method used to audit a delicatessen which had since been sold was valid. Previous audits of the deli had discovered inadequate records of the business, so an observation method was used to determine the taxpayer’s liabilities. The taxpayer at the time agreed to the fairness of the observation method. After the taxpayer ceased to operate the deli, another audit was conducted. Since there were inadequate records, and an observation could not be performed, the results of a previous observation were used to assess taxes for the period under audit. The delis proposal to examine cash register tapes for the period under audit was denied as the tapes were incomplete and did not provide any details of the transactions. Therefore courts found that the audit method was fair based on the records available. The taxpayer was unable to produce documentation that invalidated the audit assessment, so the taxpayer’s petition was denied. (In the Matter of the Petitions of North Country Catering, Inc. and St. James Colonial Deli, Inc. New York Division of Tax Appeals, DTA Nos. 821814 and 821815, September 18, 2008)