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disagree. Respondent makes this argument even though, as we
previously noted, RA Craddock testified that Vernon was
forthcoming and did not do anything to hide or cover up issues RA
Craddock raised. There is no evidence in the record that
petitioners misled RA Craddock.
3. Personal Expenses
Respondent contends that he established fraud by proving
that Vernon and Janet paid personal expenditures with TECO funds,
TECO deducted these personal expenses, and Vernon and Janet
failed to report these amounts as income.
Petitioners do not deny that TECO paid personal expenses of
Vernon and Janet. In fact, Vernon was forthcoming and forthright
in his testimony that TECO paid personal expenses of Vernon and
Janet.
As we noted supra, Janet credibly testified that she made an
honest attempt to come up with the figures listed on the Forms
1099, and the parties stipulated that Vernon and Janet intended
for the amounts listed on these Forms 1099 to cover the amount of
personal expenses paid for, and withdrawals made by, Vernon out
of TECO’s funds. If petitioners failed to list the exact amount
of Vernon and Janet’s personal expenses paid for with TECO funds
on the Forms 1099, we conclude that it was not due to fraud.
4. Remaining Badges of Fraud
The remaining badges of fraud are understating income and
filing false documents. The evidence does not establish that
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