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Petitioner’s attempt to legitimize JJH’s payment of personal
expenses with his fabricated Disney collection lease story and
the covenant not to compete story is further evidence of
petitioner’s fraudulent intent. These concocted stories show
petitioner does not hesitate to manufacture facts and events to
further his interests.14
Petitioner’s fraudulent scheme was not just a family affair,
and he recommended it to others. He set up 163 corporations for
other taxpayers. In at least one such case where the Service
challenged the personal expenses paid by the corporation and
deducted as cost of goods sold, petitioner advised his clients to
settle, stating: “Hey, we got away with it for ten years, it's
time”. At trial, petitioner proudly stood by his prior
statement, bragging: “it was good advice then and I stand by it
now”.
We conclude on this record that “it’s time” for petitioner
also. Respondent has proven by clear and convincing evidence
that petitioner underreported his income in 1994 with the
fraudulent intent of evading taxes. We sustain respondent’s
determination as to fraud.
14Petitioner similarly disliked having to pay out-of-State
tuition for Tim at the University of Central Florida, so he
perpetuated the Disney collection lease scheme to create the
appearance that Tim was self-sufficient and had fixed income.
This allowed Tim to obtain residency status for tuition purposes.
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