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individuals who are its officers or employees”). The fraud of a
sole or dominant shareholder may be attributed to the
corporation. E.J. Benes & Co. v. Commissioner, 42 T.C. 358, 383
(1964), affd. 355 F.2d 929 (6th Cir. 1966). In this case, we
must consider the actions of Mr. Zhadanov, Vortex’s president and
sole shareholder, in deciding whether some portion of Vortex’s
underpayments of tax for FYEs 1991 and 1992 was due to fraud.
The record in this case is replete with evidence supporting
respondent’s determination that Vortex’s underpayments of tax
were due to fraud. Among the evidence of fraud in the record are
the following:
(1) Repeated Understatements of Income. Vortex conceded it
failed to report income received from the manufacture and sale of
plastic vials for FYEs 1991 and 1992. That failure resulted in
underpayments of tax in excess of $28,000 and $85,000,
respectively. This failure to report substantial amounts of
income over successive years is persuasive evidence of fraudulent
intent. Kurnick v. Commissioner, 232 F.2d 678 (6th Cir. 1956),
affg. T.C. Memo. 1955-31.
(2) Implausible or Inconsistent Explanations of Behavior.
Vortex, through Mr. Zhadanov, gave inconsistent and implausible
explanations for not depositing the unreported income from vial
sales in the bank. First, Mr. Zhadanov claimed that he did not
deposit cash into the Vortex checking account because he did not
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