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inadequate books and records, failure to file returns,
concealment of assets, failure to cooperate with tax authorities,
and participation in or concealment of illegal activities. See
Niedringhaus v. Commissioner, 99 T.C. 202, 211 (1992).
A. Fraud Penalty Relating to the Zamzams
A taxpayer convicted under section 7201 is collaterally
estopped from denying liability for the civil fraud penalty
because the elements of criminal tax evasion and civil fraud are
identical. See Moore v. United States, 360 F.2d 353, 356 (4th
Cir. 1965). Thus, having been convicted of criminal tax evasion
pursuant to section 7201, the Zamzams are liable for the section
6663(a) fraud penalty. In addition, the Zamzams failed to
establish, pursuant to section 6663(b), that any portion of their
underpayment was not attributable to fraud. Accordingly, the
penalty applies to the entire underpayment of tax for 1990
through 1994.
B. Fraud Penalty Relating to ZMDI
Dr. Zamzam was the president and sole shareholder of ZMDI,
and the Zamzams fraudulently diverted corporate receipts into
personal accounts. As a result, his actions are imputed to ZMDI.
See Loftin & Woodward, Inc. v. United States, 577 F.2d 1206, 1244
(5th Cir. 1978)(holding that the court may impute the fraud of a
controlling shareholder or officer to the corporation). The
failure to report significant corporate income, false statements
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