- 53 -
The method by which petitioner withdrew funds from the
partnership accounts, caused the checks to be paid to Newtowne,
and caused Newtowne to endorse those amounts back to petitioner
is clearly fraudulent given the parties' expectation that no
services would actually be provided. Even if the parties
anticipated that petitioner would perform the stated services,
the amounts received would clearly be income. Sec. 61(a)(1).
Petitioner's failure to report the entire $180,000 is also
indicative of his intent to conceal. Because petitioner did
report $30,525 of the income he received from Park Place, we hold
that $149,475 is attributable to fraud for purposes of section
6653(b)(2).
(4) Cost Savings
Respondent asserts that petitioner's failure to report
$106,037.66 and $230,657.6911 in cost savings on his 1983 and
1984 returns, respectively, is attributable to fraud for section
6653(b)(2) purposes.
Through his tactics, petitioner caused Newtowne to construct
a 10,000-square-foot house. Petitioner financed the project with
cost savings from various construction projects he caused the
partnerships to enter into with Newtowne. As indicated,
11 The $230,657.69 equals $200,657.69 in cost savings plus
$30,000 in architectural services provided by Riat.
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