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First, as indicated above, petitioner's contention that the
distributions represented loan repayments to him is unsupported
by any independent evidence and is contradicted by the corporate
tax returns that he prepared and filed. Second, in view of his
business experience, it is not credible that he believed that
over a period of 13 years he could withdraw substantial sums of
money from the corporation for his living expenses, report no
income from the services that he performed on behalf of the
corporation or dividends from the corporation, and have no income
tax liability and no obligation to file tax returns. His
position in this regard is too untenable to be believed.
Petitioner also had experience in this Court, as reflected
in an opinion rendered not long before he commenced his pattern
of failing to file returns. See Mathers v. Commissioner, 57 T.C.
666 (1972). Petitioner apparently was sufficiently knowledgeable
to prepare the corporate tax returns, and he has not suggested
that he relied on any professional advice that he had no
obligation to file individual returns. Under these
circumstances, the use of the corporation to pay his personal
expenses is clear and convincing evidence of fraud. See Benes v.
Commissioner, 42 T.C. 358, 384 (1964), affd. 355 F.2d 929 (6th
Cir. 1966); Hedlund v. Commissioner, T.C. Memo. 1993-455; Kahrahb
Restaurant, Inc. v. Commissioner, T.C. Memo. 1992-263.
We are convinced that petitioner underpaid taxes due for the
years in issue when he failed to report as income the
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