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Petitioner’s failure to keep books was part of his design to
hide or obscure his numerous and successful transactions in
operating and trading real property. It is also likely that
petitioner's anonymous involvement with Ms. Jackson and the road
contracts was a deception to permit petitioner to participate in
a minority and/or woman's preferential program. Petitioner did
suffer a loss in his transactions with Ms. Jackson as well as his
transactions with Mr. Welch. The losses incurred in these
transactions were funded with income from petitioner's successful
real estate activity, some of which was not reported to
respondent. Petitioner was knowledgeable about and in control of
his real estate activity. Interest income and gains on sales
were consistently understated on petitioner's returns for each of
the years before the Court.
We accordingly sustain respondent's determination that a
part of the understatement for the taxable year 1985 was due to
fraud. With respect to the 1986, 1987, 1988, and 1989 taxable
years, the unreported income from interest, rent, and the sale of
property are due to fraud. For the 1986 taxable year, the
unreported income (adjustment “g.” on Form 5278 of the notice of
deficiency) is also due to fraud. With respect to the 1989
taxable year, the item of increased income attributable to the
section 1031 gain is also due to fraud. Because we have found
that petitioner is liable for fraud for each of the taxable years
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