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misrepresent and conceal his receipt of those same
funds from the Government with intent to evade tax.
Rogers v. Commissioner, 111 F.2d 987 (C.A. 6, 1940).
The legal relevancy of such evidence is based upon
logical principles which go to negate innocent intent.
United States v. Bridell, 180 F.Supp. 268 (N.D. Ill.
1960); Pappas v. United States, 216 F.2d 515 (C.A. 10,
1954).
On July 12, 1988, petitioner requested that the State of
Hawaii place his specialty masonry contractor’s license on
“inactive status”. Afterward, petitioner continued to operate
that business on an unlicenced basis. Petitioner had gross
receipts from his masonry business of $318,315 in 1989. Around
August of 1989, petitioner stopped using his business checking
account in favor of conducting the masonry business using cash.
Petitioner started paying his employees in cash as of July 21,
1989, rather than by check. Petitioner received a large
insurance settlement and converted the check into cash rather
than depositing that amount into a bank account. Petitioner's
conduct in operating an unlicenced business and switching to cash
transactions is further evidence of petitioner’s fraudulent
intent.
Petitioner suggests that his failure to file and pay tax for
the years 1986 through 1989 was not fraudulent because the
Internal Revenue Service was aware of his noncompliance. The
fact that petitioner’s failure to file returns was known to the
IRS does not preclude a finding of fraud. Disclosed defiance,
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