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Petitioners deducted $7,500 on Schedule A as a charitable
contribution and on Schedule C as an advertising expense and as
an office expense. Petitioner testified that he merely entered
data in response to questions posed by the software. We believe
that petitioner fraudulently entered the $7,500 amount three
times. He had not paid the $7,500 at all and thus should not
have entered the $7,500 amount even once.
We are not finding fraud merely because petitioner deducted
the $7,500 three times; it is also significant that petitioner
never paid the $7,500.
c. Giving Implausible or Inconsistent Explanations
Implausible or inconsistent explanations of behavior by a
taxpayer can show that the taxpayer had fraudulent intent.
Bradford v. Commissioner, 796 F.2d 303, 307-308 (9th Cir. 1986),
affg. T.C. Memo. 1984-601; Korecky v. Commissioner, 781 F.2d
1566, 1568 (11th Cir. 1986), affg. T.C. Memo. 1985-63; Bahoric v.
Commissioner, 363 F.2d 151, 153 (9th Cir. 1966), affg. T.C. Memo.
1963-333; Grosshandler v. Commissioner, 75 T.C. 1, 20 (1980).
Petitioner’s explanations of his alleged payment of $7,500 and
$54,000 for legal and professional expenses were implausible and
inconsistent with his actions. Deducting his payments to Pekas
and Davoli as legal and professional fees is inconsistent with
petitioner’s testimony that the payments were loan repayments.
Petitioner’s testimony that the computer software is to blame for
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