Willie Thomas - Page 14

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          v. United States, 317 U.S. 492, 498 (1943); Stephenson v.                   
          Commissioner, 79 T.C. 995, 1005 (1982), affd. 748 F.2d 331 (6th             
          Cir. 1984).  The taxpayer's entire course of conduct may                    
          establish the requisite fraudulent intent.  Stone v.                        
          Commissioner, 56 T.C. 213, 223-224 (1971).  The mere existence of           
          deficiencies in tax liability does not show fraud.  Otsuki v.               
          Commissioner, supra at 106.  Exceedingly large discrepancies                
          between a taxpayer's actual income and reported income, however,            
          do constitute evidence of fraud when such discrepancies are                 
          unexplained.  Stone v. Commissioner, supra at 224.                          
               Petitioner reported gross income of $25,250.85 for 1984 and            
          $24,615.67 for 1985.  Respondent determined that petitioner                 
          actually had gross income of $199,713.04 for 1984 and $119,990.50           
          for 1985.  The only explanation furnished by petitioner for these           
          large discrepancies was that he had accumulated $210,000.                   
          Petitioner, however, failed to present any credible evidence                
          establishing the existence of the accumulated cash.   Moreover,             
          even if the $210,000 existed, petitioner testified that he                  
          invested all of it before the years in issue.  Therefore,                   
          petitioner's explanation for the discrepancies is unpersuasive.             
          We conclude that the record provides sufficient evidence of                 
          petitioner's fraudulent intent to evade taxes for 1984 and 1985.            
               Accordingly, for 1984 and 1985, we hold that petitioner,               
          pursuant to section 6653(b)(1) and (2), is liable for additions             
          to tax for fraud.  We conclude, however, that the portion of the            




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