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consistently and substantially underreported for each of the
years 1972 through 1976.
2. Consistent and Substantial Understatements of Income
Consistent and substantial understatement 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).
Although petitioner carefully kept track of the income he
generated, he did not disclose to Mr. Giffin, his accountant and
return preparer, substantial amounts that were not recorded in
the books and records of his sole proprietorship, CTC. For 1972,
1973, 1974, 1975, and 1976 business receipts directed to accounts
other than petitioner's or CTC's CNB accounts and not recorded in
CTC's books exceeded approximately $1,000,000, $750,000,
$2,500,000, $1,850,000 and $1,375,000, respectively. These
omitted amounts greatly exceeded the reported Schedule C gross
profit in every year except 1976; in that year the omitted amount
was 80 percent of the reported gross profit. Mr. Giffin did not
know about these deposits because he knew only what was recorded
in CTC's cash receipts journal. Furthermore, Mr. Giffin never
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