Anthony and Linda Walters - Page 24

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          petitioners' agreeing that the gross income in their returns for            
          1987, 1988, and 1989 was understated in the amounts of $10,143,             
          $55,855, and $69,556, respectively.  These amounts are                      
          substantial when compared to the total gross income of $40,548,             
          $44,081, and $39,860 reported as received from Fruitland during             
          1987, 1988, and 1989, respectively.  There is little doubt that             
          petitioner knew that his income for each taxable year at issue              
          exceeded the amount reflected on his return for that year.                  
          Petitioner was the partner responsible for managing the financial           
          affairs of the partnership.  All transactions involving the                 
          partnership checking account, including those transactions                  
          relating to petitioner's personal expenditures, were reflected on           
          bank statements which petitioner received.  Petitioner was also             
          the partner who purchased and maintained the cashier's checks.              
          Despite possessing knowledge of this information, petitioner                
          refrained from sharing it with his accountant.  Instead,                    
          petitioner filed the returns as prepared by his accountant.  The            
          frequency and magnitude of the unreported income conceded by                
          petitioners is probative evidence that supports our finding that            
          the understatements of income were fraudulent, rather than                  
          inadvertent or accidental.  Such a pattern of consistent                    
          underreporting of income is strong evidence of fraud.  Otsuki v.            
          Commissioner, supra at 106-108; Smith v. Commissioner, supra.               
          This evidence justifies the inference of fraud.  See Holland v.             
          United States, 348 U.S. 121, 137 (1954).                                    




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