William C. Beretta - Page 24

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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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