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permitted him to conceal and fail to report income. Conducting a
cash business does not per se prove fraud. When coupled with
attempts to conceal transactions or avoid the requirement of
reporting cash transactions, it becomes more probative. See,
e.g., Beck v. Commissioner, T.C. Memo. 2001-270. Dealings in
cash, however, do heighten the negative effect of inadequate
record keeping, one of the indicia of fraud indicated above.
Ferguson v. Commissioner, T.C. Memo. 2004-90; McGirl v.
Commissioner, T.C. Memo. 1996-313, affd. without published
opinion 131 F.3d 143 (8th Cir. 1997). The businesses in which
petitioner was involved required substantial documentation.
Conducting businesses in cash provided petitioner the opportunity
to conceal his business income.
Fraudulent intent can be shown by circumstantial evidence.
Gajewski v. Commissioner, 67 T.C. 181 (1976). Petitioner’s
knowledge of the tax law undermines any argument that he was
unaware that the income was subject to tax. Petitioner’s actions
and behavior were consistent with an attempt to conceal.
Finally, petitioner pleaded guilty to willfully making a false
return under section 7206(1). After careful review of the
record, we hold that petitioner’s entire course of conduct
demonstrates fraudulent intent.
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