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Lauth, his tax return preparer, that he had unreported income and
that it had been going on for some time.
Mr. McGirl testified that he conservatively "guesstimated"
the store's gross income and expenses. Mr. McGirl's guesstimates
of gross income and expense were so far off the mark that we
conclude that they were not good faith estimates at all. Even if
we were to believe the loan story, petitioners still saved more
than $38,000 in excess of the alleged loan proceeds. Even when
the alleged loans ended, the Yogurt Station's deposits kept
increasing.
Mr. McGirl testified that: (1) He did not know if he was
the sole owner of Mickey's Diner; (2) he had no idea if his
corporation had stock; (3) he cannot remember the name on the
Yogurt Station's tax return; and (4) neither the MDR or the IRS
auditors ever asked to see his auto logs. The above statements,
when taken as a whole, show Mr. McGirl's lack of credibility and
are evidence of fraud.
g. Dealing in Cash
Mr. McGirl testified that his purported side business and
alleged borrowings were transacted exclusively in cash. The
existence of cash transactions is difficult to disprove.
However, the exclusive use of cash when conducting business
transactions, when coupled with a lack of recordkeeping, is
evidence of fraud.
h. Other factors
We also consider it significant that Mr. McGirl pleaded
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