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liabilities were consistently and substantially underreported for
each year at issue.
2. Consistent and Substantial Understatements of Income.
Consistent and substantial understatements of income may be
strong evidence of fraud. Marcus v. Commissioner, 70 T.C. 562,
577 (1978), affd. without published opinion 621 F.2d 439 (5th
Cir. (1980). Moreover, a pattern of consistent underreporting of
income, when accompanied by other circumstances indicating an
intent to conceal income, justifies the inference of fraud.
Holland v. United States, 348 U.S. 121, 137 (1954).
This case involves a 7-year period during which petitioner
failed to report interest earned on his foreign bank account.
Moreover, the amount of unreported income for each year at issue
is substantial in comparison with the amount of gross income
petitioner reported for such years. The following table
illustrates the omitted interest income as a percentage of
petitioner's reported gross income:
Year Percentage of Income
1980 19.68
1981 47.43
1982 55.38
1983 42.56
1984 29.13
1985 87.82
1986 55.06
1Petitioner also did not report a short-term capital gain of
$13,117.23 in 1980. The figure in the table above does not
include the omitted short-term gain.
Such failure to report substantial amounts of income over a
number of years is effective evidence of fraud. Marcus v.
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