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file if they could pay the tax owing. Respondent contends, and
we are persuaded, that petitioner’s failure to file an income tax
return for 1995 is evidence of fraud.
Consistent failure to report substantial amounts of income
over a number of years is, standing alone, highly persuasive
evidence of fraudulent intent. See Kurnick v. Commissioner, 232
F.2d 678 (6th Cir. 1956), affg. T.C. Memo. 1955-31; Temple v.
Commissioner, T.C. Memo. 2000-337, affd. 62 Fed. Appx. 605 (6th
Cir. 2003). Here, when the Masons’ income tax returns for 1993,
1994, and 1995 were eventually filed, they reported adjusted
gross income of $107,336, $148,221, and $97,064 respectively.
Respondent argues, and we agree, that this failure to report such
substantial income is evidence of fraud.
Concealing assets or income is also an indicium of fraud.
Douge v. Commissioner, supra; Bradford v. Commissioner, 796 F.2d
303 (9th Cir. 1986); Recklitis v. Commissioner, supra at 910.
Respondent contends, and we agree, that petitioner took
affirmative steps to conceal his income and assets. Petitioner
had no bank account in his name. He used bank accounts solely in
his wife’s name or in the name of El Dorado. He also transferred
all of his various business interests and his residence to
various trusts to conceal his assets and frustrate respondent’s
collection efforts.
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