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family expenditures during the years at issue.10 These
expenditures included, in addition to the basic living expenses
required for the Barrancos to live what Dr. Barranco described as
a “nice life”: The purchase of over 110 acres; the construction
of their primary residence; the payoff of the mortgage on their
vacation home after about 8 years; the remodeling of their
vacation home; several European vacations; college tuition, room,
and board for each of their four children; weddings for their
three daughters; diamond jewelry; and the Barrancos’ purchase of
several cars and a boat for themselves, as well as at least three
cars and a horse for their children.
10 The only direct evidence that petitioner offered on this
score came from Dr. Barranco’s testimony. Although Dr. Barranco
testified that none of the omitted income was used to benefit the
family, his testimony fails to account for the disposition of at
least $4,890,932 of omitted income. More particularly, Dr.
Barranco testified that 10 percent of the $5,878,813 of omitted
income (i.e., about $587,881) went to the New York City
accountant and that the remaining 90 percent (i.e., about
$5,290,932) was placed--
in checking accounts and funds that I could draw from
if I needed it, and an escrow type of account which
could be used for investment purposes and it was
available. So it was an account that was there. If it
was needed, I could tap into it.
Dr. Barranco testified that when the authorities uncovered his
tax evasion scheme, there was $400,000 or $450,000 in the escrow
account which was seized pursuant to the criminal investigation.
Assuming, for sake of argument, that this representation is true,
it means that at least $4,840,932 ($5,290,932 minus $450,000) of
the omitted income is unaccounted for.
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