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circumstantial evidence of fraud. Korecky v. Commissioner supra;
Plunkett v. Commissioner, 465 F.2d 299, 303 (7th Cir.
1972)(taxpayer’s business success indicated more than gross
negligence), affg. T.C. Memo. 1970-274; Niedringhaus v.
Commissioner, 99 T.C. 202, 211 (1992).
Petitioner had a clear pattern of underreporting income, as
the previously described understatements spanning 1994 through
1997 document.
Petitioner’s records were inadequate with respect to his
basis in the yachts and the real estate he sold, as well as his
charter business. Moreover, his testimony concerning his former
spouse’s theft of his records lacked credibility, and other
evidence concerning his records shows that his account is
implausible and inconsistent. Notably, petitioner has failed,
through the time of trial, to make any serious effort to
reconstruct his records. Though he claims his ex-wife took
records, he did not subpoena her to obtain them. He generally
failed to contact any vendors of the goods or services that
underlay his unsubstantiated basis claims; in one instance where
a contact was made, petitioner did not disclose the retrieved
records to respondent. Petitioner did not offer the testimony of
any vendors. Petitioner claimed that his efforts to obtain
records from his financial institutions were unsuccessful,
whereas respondent was able to obtain them. Instead of making a
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