- 21 -
Cir. 1962), affg. T.C. Memo. 1959-172. Consistent and
substantial understatement of income, however, may be strong
evidence of fraud when coupled with other circumstances. Marcus
v. Commissioner, 70 T.C. 562, 577 (1978), affd. without published
opinion 621 F.2d 439 (5th Cir. 1980). A pattern of consistent
underreporting of income, when accompanied by other circumstances
indicating an intent to conceal income, may justify the inference
of fraud. Holland v. United States, 348 U.S. at 139.
Petitioner concedes that he omitted gross income of $44,314
and $58,668 for 1989 and 1990, respectively.9 The
understatements for all 3 years in issue are consistent and
substantial; they are evidence of fraud.
4. Failure To Maintain Adequate Books and Records
Failure to maintain adequate books and records may be
indicative of fraud. Truesdell v. Commissioner, 89 T.C. 1280,
1302 (1987); Gajewski v. Commissioner, supra at 200. Petitioner
did not have a bookkeeper or maintain any formal books of account
for his medical practice. Petitioner summarized his expenses for
each year on a few sheets of paper. Petitioner maintained client
billing records, but he failed to provide them to Mr. Jung or
offer them into evidence at trial. All of this is evidence of
fraud.
9 We note that the amounts petitioner omitted for 1989 and
1990 are larger than what he concedes and that he also omitted
gross income for 1988.
Page: Previous 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 NextLast modified: May 25, 2011