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We also find it persuasive that the skimming from the
restaurants continued for a number of years. Courts have held
that consistent understatements of income in substantial amounts
over a number of years by knowledgeable taxpayers are persuasive
evidence of fraudulent intent to evade taxes. Baumgardner v.
Commissioner, 251 F.2d 311, 322 (9th Cir. 1957), affg. T.C. Memo.
1956-112; Otsuki v. Commissioner, supra at 107-108.
Another important factor in this case is Mr. Beretta's
knowledge of the tax laws. The intelligence and sophistication
of the taxpayer, especially his knowledge of the tax laws, is an
important factor in determining whether he committed fraud.
Scallen v. Commissioner, 877 F.2d 1364, 1370-1371 (8th Cir.
1989), affg. T.C. Memo. 1987-412. Mr. Beretta was employed by
the Internal Revenue Service as a revenue officer for nearly 30
years. Mr. Beretta was trained to identify tax examination
situations and to inform taxpayers of their obligation to pay
taxes. In addition, he investigated taxpayers who had failed to
file tax returns.
Petitioner asserts that he honestly believed that the
proceeds were repayment for interest-free loans made to the
restaurants. We find it difficult to believe that a person with
petitioner's knowledge of tax law would not know that the receipt
of cash directly from the cash registers of the restaurants he
owned was not taxable. There was no loan schedule nor were there
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