- 16 -
A final argument by petitioners deserves brief
consideration. Petitioners contend that if they were attempting
to evade taxes, they would not have left such a clear “paper
trail”. Specifically, petitioners argue that a lack of
fraudulent intent should be inferred from the fact that all of
the diverted cash was deposited into Mrs. Parsons’ checking
account, creating a clear record of the diversions which they
would have avoided if their intent were to evade. As discussed
previously, the record in this case refutes petitioners’ claim
that all their cash withdrawals from Cedar Hill were deposited
into Mrs. Parsons’ checking account. A second “paper trail” that
petitioners contend they created, which rebuts fraudulent intent,
concerns the accurate recording of all of Cedar Hill’s cash sales
on the pink sheets. According to this argument, it would have
been “very simple” for Mr. Parsons to avoid ringing up cash sales
on the register or to record a lower figure for cash sales on the
pink sheets if he intended to evade taxes. We find this argument
unpersuasive. First, the record in this case does not establish
that the pink sheets accurately recorded Cedar Hill’s
transactions in cash. Respondent reconstructed unreported income
using the bank deposit and cash expenditures method, not by
reference to data on the pink sheets. As to the suggestion that
Mr. Parsons could have simply avoided ringing up sales on the
register if he wished to divert cash surreptitiously, we note
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