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acting pursuant to a purported power of attorney given by Michael
Van Heemst. During this time, however, it appears that there was
in existence a sale agreement, dated September 3, 1990, pursuant
to which petitioner, as transferee for a company to be
incorporated, purported to purchase the assets of Pieces of Eight
from Michael Van Heemst and which petitioner kept hidden in his
files. Petitioner, moreover, did not assist the agent in
reconstructing the taxable income of Pieces of Eight for the
years in issue, even though he was its bookkeeper. Making false
and inconsistent statements to the Commissioner’s agents during
the course of their examinations is a badge of fraud, as is
failure to cooperate with the agents. Grosshandler v.
Commissioner, 75 T.C. 1, 20 (1980).
Furthermore, we consider petitioner’s testimony at trial,
which we found to be at times vague, evasive, inconsistent, and
incredible. “Although mere refusal to believe the taxpayer’s
testimony does not discharge the Commissioner’s burden, * * * the
lack of credibility of the taxpayer’s testimony, the
inconsistencies in his testimony, and his evasiveness on the
stand are heavily weighted factors in considering the fraud
issue.” Toussaint v. Commissioner, 743 F.2d 309, 312 (5th Cir.
1984), affg. T.C. Memo. 1984-25.
Petitioner relies on a memorandum from respondent’s Criminal
Investigation Division declining to accept referral of
petitioner’s case for criminal prosecution. That petitioner’s
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