Domer L. Ishler - Page 29

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          opaque series of transfers in 1987 and 1988.  Petitioner knew               
          about but did not report the diverted payments.  This badge of              
          fraud applies to petitioner for 1987 and 1988 because he                    
          knowingly diverted NSA’s payments for his personal use in both              
               Petitioners contend that the fact that respondent took 8 to            
          10 years to determine the taxation of the unreported income in              
          dispute here shows that respondent had doubts about this case and           
          so has not proven by clear and convincing evidence that                     
          petitioner and TCM are liable for fraud for the years in issue.             
          We disagree.  Petitioner should not benefit from the fact that it           
          took respondent a long time to penetrate the maze petitioner                
          chose to create.                                                            
               Respondent has clearly and convincingly proven that                    
          petitioner had the requisite fraudulent intent, and that all of             
          petitioner’s underpayments are due to fraud.11  Thus, petitioner            
          is liable for the addition to tax for fraud under section 6653(b)           
          for 1987 and 1988.                                                          
                    b.   Fraud as to TCM                                              
               We have found that petitioner is liable for the fraud                  
          penalty for 1987 and 1988.  See paragraph B-4-a, above.                     

               11  Even if we found that respondent established by clear              
          and convincing evidence that petitioner is liable for fraud only            
          on the payments he diverted from TCM to Double D or his own                 
          checking account, the burden would then shift to petitioner to              
          show how much of the underpayment is not due to fraud.  Sec.                
          6653(b)(2).  Petitioner has not shown that any of the                       
          underpayments for 1987 and 1988 was not due to fraud.                       

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