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“very good incomes” that orthopedic surgeons might generally be
expected to earn to support such a lifestyle. On the basis of
all the evidence, we believe that petitioner should have been
aware of this discrepancy.
Petitioner testified that after Dr. Barranco commenced his
medical practice (sometime well before 1983), their lifestyle
“kept getting better and better” because he “was making more
money * * * as far as I was concerned”. Yet in 1983, the
Barrancos’ reported income dropped precipitously, we surmise, for
in that year their joint return omitted $805,819 of gross
income.11 As previously discussed, petitioner is charged with
knowledge of the amounts of income reported on the joint returns.
See Hayman v. Commissioner, 992 F.2d at 1261; Terzian v.
Commissioner, 72 T.C. at 1170.
The pattern persisted for the next 9 years: the Barrancos’
joint returns continued to omit very large amounts of gross
income even as their lifestyle kept getting “better and better”.
They acquired parcels of real property substantially greater than
the amounts they had acquired before the tax years at issue; they
11 The record does not reveal how much gross income the
Barrancos reported for any year before 1983. The evidence does
indicate, however, that Dr. Barranco’s tax evasion activities
commenced in 1983, at a time when the Barrancos’ lifestyle had
been steadily improving. Accordingly, we infer that in 1983
there was a falling off in the Barrancos’ reported income more or
less commensurate with the $805,819 of gross income that was
omitted from the Barrancos’ 1983 joint return.
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