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fraud.” Truesdell v. Commissioner, 89 T.C. 1280, 1302 (1987);
Marcus v. Commissioner, 70 T.C. 562, 577 (1978), affd. without
published opinion 621 F.2d 439 (5th Cir. 1980).
For 1994, Michael reported $68,758 of Schedule C gross
receipts from the plumbing business. Respondent has shown by
clear and convincing evidence that Michael should have reported
at least $85,683. Supra table 7. We conclude that the $16,925
difference is a substantial underreporting.
For 1995, Michael reported $82,721 of Schedule C gross
receipts from the plumbing business. Respondent has shown by
clear and convincing evidence that Michael should have reported
at least $162,038. Supra table 8. We conclude that the $79,317
difference is a substantial underreporting.
For the 2 years in issue, Michael failed to report an
aggregate of about 40 percent of his Schedule C gross receipts
from the plumbing business.
(2) Failure To Keep Adequate Books and Records
Taxpayers are required to maintain books and records
sufficient to show their tax liabilities. See sec. 6001.
Failure to do so is another indicium of fraudulent intent. See
Bradford v. Commissioner, 796 F.2d at 307.
Respondent contends that petitioners’ records for the
plumbing business were incomplete and inconsistent. For 1995,
respondent points to the fact that the total amount of the adding
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