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(8) Petitioner’s admission that he purposely mislabeled
checks to his corporation as loans is also evidence of his
willingness to defraud. See Solomon v. Commissioner, 732 F.2d
1459 (6th Cir. 1984), affg. T.C. Memo. 1982-603; Afshar v.
Commissioner, 692 F.2d 751 (4th Cir. 1982), affg. without
published opinion T.C. Memo. 1981-241.
The record before the Court clearly and convincingly
demonstrates a pattern of consistent underreporting of income.
The record clearly and convincingly shows that petitioner
intentionally concealed significant business operations from his
accountants and bookkeeper. Petitioner’s vague testimony
buttresses our finding. There can be little doubt that
petitioner’s failure to keep adequate records of all earnings and
expenses is material evidence of fraud. See Otsuki v.
Commissioner, 53 T.C. at 109. “To hold otherwise would, as the
Supreme Court stated in United States v. Johnson, 319 U.S. 503,
518 (1943) ‘be tantamount to holding that skillful concealment is
an invincible barrier to proof.’” Id. at 109. The insufficiency
of petitioner’s records, under these circumstances, constitutes a
significant indicia of fraud. Id. at 110.
3. Petitioner’s Conviction and Collateral Estoppel
We find petitioner’s guilty plea of knowingly filing false
returns for 1991 and 1992 is additional evidence, which ensures
us that the imposition of the fraud penalty in this case is
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