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business records that petitioner maintained for Grand Video are
hardly adequate to establish the amount of Grand Video’s gross
income for any of the years in issue. Petitioner’s failure to
keep adequate books and records of his predominately cash
business provides strong support for the imposition of the fraud
penalties in this case.
Additional support for the imposition of the fraud penalties
is found in the inconsistent and implausible claims that
petitioner made as to the existence of a substantial accumulation
of cash in his safe. Petitioner made no less than three
different estimates of the amount of cash he had accumulated in
his safe at the beginning of 1993 and the amount that remained at
the close of 1995. We note that his initial claim, i.e., $60,000
at the beginning of 1993 and $40,000 at the close of 1995, even
if true, would have had only a slight effect on respondent’s net
worth computations when spread over the 3-year period. Our view
of petitioner’s cash hoard claim has been set forth above, and
there is no point in repeating it here. Suffice it to say that
petitioner’s inconsistent and implausible claims that he
possessed a substantial cash hoard strongly support the
imposition of the fraud penalties in this case.
Lastly, we cannot ignore petitioner’s practice of paying his
employees “under the table” until he was examined and fined by
Washington State authorities in 1995. His conduct in this regard
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