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Commissioner, supra. Petitioner's failure to report the interest
income also presents a consistent pattern from which an inference
of fraud may be drawn. Holland v. United States, supra.
3. Implausible or Inconsistent Explanations of Behavior.
Implausible or inconsistent explanations of behavior may be
a badge of fraud. Bradford v. Commissioner, supra. Petitioner
testified that he did not report the interest earned on the
foreign account because he believed that such income was not
reportable until it was physically received, instead of merely
being credited to his account. It was because of this belief,
petitioner further testified, that he did not inform his
accountant about the foreign account or the interest earned
thereon. This explanation is implausible, and, in light of
petitioner's sophistication, we find it to be without merit.
Furthermore, this explanation is particularly difficult to accept
in light of petitioner's testimony regarding interest income that
he received from domestic sources. Although petitioner testified
that he could not recall what he believed to be the proper tax
treatment of domestic interest income during the years at issue,
petitioner testified that he relied on his accountant to treat
such interest properly when preparing his returns. It seems
inconsistent to us that petitioner would rely on his accountant
to treat his domestic interest income properly while at the same
time preventing his accountant from providing similar treatment
to his foreign interest income.
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