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Dagon v. Commissioner, supra (no fraud where the taxpayer met
with the Commissioner's agent several times during the course of
criminal investigation and gave the agent all books and records,
explained procedures followed in preparation of those records,
and provided complete access to personal banking records). Only
after counsel was retained did petitioners cooperate with
respondent's agent, which of course does not rectify their
previous intransigence. Cf. Badaracco v. Commissioner, 464 U.S.
386, 394 (1984).
6. Petitioners' Sophistication and Experience
Petitioners seek to portray themselves as tax naifs who
operated a "mom-and-pop" business. They rely on Cheek v. United
States, 498 U.S. 192 (1991), in arguing that a good faith
misunderstanding of the tax law may negate fraud. However,
petitioners' own testimony clearly belies their assertions of
inexperience and good faith. Petitioners are both well-educated,
adept business people who have successfully cultivated an
international clientele. Susanna has a degree in accounting. At
trial, petitioner demonstrated an awareness of capital loss
carryforwards; he knew that the general statute of limitations
for tax returns was 3 years, and that taxpayers could amend their
tax returns at any time to report additional income. Moreover,
he knew how to structure business ventures in a tax-advantaged
manner. Their experience reveals that petitioners understood the
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