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the Polymer and Chemical Traders bank accounts. He caused the
following amounts to be deposited into the Polymer bank account:
$238,555.24 in 1964, $87,750.12 in 1966, $40,818.47 in 1968,
$122,559.81 in 1969, and $5,370.72 in 1970. He caused at least
the following amounts to be deposited into the Chemical Traders
bank account: $297,115.19 in 1964, $248,435.81 in 1965,
$526,815.33 in 1966, $253,767.62 in 1967, $66,554.58 in 1968,
$70,878.23 in 1969, and $15,600 in 1970. Thus, petitioner
diverted funds from Resyn to the accounts he controlled in each
year from 1964 to 1970. Petitioner wrote Chemical Traders checks
to cash of at least $140,199 in 1965, $76,000 in 1966, $167,000
in 1967, $89,500 in 1968, $45,500 in 1969, and $19,500 in 1970.
Petitioner wrote checks to cash on the Polymer account that
Levenson had signed. Those checks totaled at least $40,000 in
1968 and $108,000 in 1969. Petitioner did not report any of
these amounts on his income tax returns.
Petitioner contends that respondent did not prove an
underpayment by clear and convincing evidence because respondent
could not show what petitioner did with all of the diverted
funds. We disagree. As discussed above, we conclude that those
funds became taxable to petitioner when he diverted those funds
to the Polymer and Chemical Traders accounts. Further, even if
respondent were required to show that petitioners used diverted
funds for each year from 1964 to 1970, we conclude that
respondent has done so by clear and convincing evidence.
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