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liability for civil fraud with respect to 1987. Gray v.
Commissioner, 708 F.2d 243, 246 (6th Cir. 1983), affg. T.C. Memo.
1981-1.
Next, we consider whether respondent established that
petitioner committed fraud for his 1984, 1985, and 1986 taxable
years. Viewing the record as a whole, we are satisfied that
respondent has met her burden of proving fraud. Among other
things, we note that petitioner: (1) Intentionally understated
his income, (2) did not keep books for either his rental or
insurance business, (3) failed to segregate his other income and
expenses from the income and expenses of his insurance agency and
rental activities, and (4) engaged in conduct which clearly
indicates his attempt to conceal income by instructing his
tenants to lie to the Internal Revenue Service about the rent
they paid to him.4 Petitioner had a 4-year pattern of
underreporting his gross income; petitioner admits that he
received commission checks for insurance commissions but did not
report these amounts unless the insurance companies reported the
amounts on Forms 1099; and petitioner admits that he received and
failed to report rental income from his tenants at 1739 Swift.
On loan applications, he disclosed to financial institutions
4 In the stipulation of facts, the parties agreed that the
Wilsons would testify that petitioner instructed the Wilsons to
lie to the Internal Revenue Service about the amount of rent they
paid. At trial, petitioner testified that he never instructed
the Wilsons to lie. We do not find petitioner's testimony
credible.
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