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his and Betsy’s, and the Sley Corporations’, tax returns and (2)
determine the amounts of Betsy’s dividends.
We agree with significant portions of respondent’s
contentions, but conclude that respondent failed to carry the
heavy burden of proof as to 1983 and 1984.
Petitioner knew that he and Betsy charged personal expenses
on Markette’s American Express credit cards. Petitioner oversaw
the Sley Corporations’ daily operations and knew that Markette
paid these charges and did not identify these payments as
payments of personal expenses. Petitioner knew that Berger was
not retained to audit the Sley Corporations’ books and records,
and so Berger almost certainly would not discover that Markette
paid petitioner’s and Betsy’s personal expenses. Petitioner, a
tax lawyer familiar with constructive dividend rules, understood
that he and Betsy were failing to report income on which they
were taxable. Petitioner’s attempts to blame the omissions on
Baybrook, Berger, and Betsy are not credible; these attempts are
a further indication of petitioner’s fraudulent intent. We
consider these elements seriatim, and then deal with other
considerations.
(1) Petitioner’s Knowledge of Credit Card Charges
Firstly, petitioner went on almost all of the trips
discussed in part A. If petitioner did not go with his family on
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