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had bank deposits from unexplained sources that substantially
exceeded reported income, concealed bank accounts, used
fictitious names or names of relatives to disguise ownership of
assets, used a safe deposit box to hide valuables, utilized large
sums of currency, kept a double set of books, made fictitious
entries in or altered TECO’s books, created fictitious invoices
or other documents, concealed records, destroyed records, failed
to keep records, refused to make records available, asked third
parties to alter their records or hide their transactions with
petitioners, had income from illegal activities, failed to file
tax returns, made implausible or inconsistent explanations, or
attempted to hinder, delay, or interfere with the IRS’s
investigation.
OPINION
The statutory notices of deficiency determined that the
deficiencies in their entirety were due to fraud. Respondent
concedes that absent a finding of fraud, the periods of
limitations for all the years in issue have expired. Respondent
argues that the only reasonable inference that can be drawn from
the facts of these cases is that Vernon, Janet, and TECO
fraudulently understated their taxable income for each of the
years in issue. We disagree.
The addition to tax and penalty in the case of fraud is a
civil sanction provided primarily as a safeguard for the
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Last modified: May 25, 2011