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personal expenses, and did not correlate with the numbers on
petitioner’s return.
Petitioner admits he engaged in a pattern of concealing
assets from the Service, and he was not reluctant to acknowledge
his disdain for paying taxes, bragging at trial that he formed
Coastal to hide his assets from the Service.
Petitioner failed to cooperate during the audit, and his
claim that the flood of the Muehl residence prevented him from so
doing is not credible. The flood did not destroy relevant
documents requested by respondent, such as bank statements,
canceled checks, or deposit slips, as evidenced by the fact
petitioner was able to produce these documents close to trial.
Petitioner precisely included in the income of JJH all
amounts deposited into its bank account, notwithstanding the fact
that he knew he was including transfers between accounts and
double counting income.11 Petitioner points to this as evidence
there was no intent to deceive. To the contrary, this was part
of the deception plan. Petitioner admitted that he knew a tax
auditor would always compare bank statements with reported
receipts. Petitioner’s ensuring that the numbers matched was his
attempt to deceive the Service into believing his return and
11Petitioner testified: “Now, the problem with that income
is that it includes transfers and/or loans and/or exchanges of
money between those corporations of Joseph House, Coastal Leasing
and Char’s”.
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