- 46 -
the personal nature of expenses is evidence of fraud. See
Truesdell v. Commissioner, 89 T.C. 1280, 1302-1303 (1987); Benes
v. Commissioner, 42 T.C. 358, 383 (1964), affd. 355 F.2d 929 (6th
Cir. 1966).
Although it appears that the accounting records of Romer &
Co. were adequate for petitioner to accurately determine and
report his income therefrom, he chose not to. With respect to
his aviation activities, petitioner failed to maintain adequate
records of his income and expenses, and this failure is
circumstantial evidence of fraud. See Bradford v. Commissioner,
supra at 307-308; Clayton v. Commissioner, 102 T.C. 632, 647
(1994).
Finally, in 1996, petitioner pleaded guilty to one count of
violating section 7203 for the willful failure to supply
information on his 1991 Federal income tax return. In his plea
agreement, petitioner admitted that “the civil fraud penalty and
interest applies to whatever additional tax he is deemed to owe
after pursuing remaining civil remedies for tax years 1989-1991.”
Petitioner’s admission, even if assumed to be nonbinding, is at
the least evidence that his underpayments for these years were
due to fraud. See Williams v. Commissioner, T.C. Memo. 1994-560.
In sum, respondent has shown by clear and convincing
evidence that petitioner underreported his income in the subject
years with the fraudulent intent of evading taxes. Petitioner
has failed to rebut the presumption that the entire underpayment
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