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Gunderson and the bank records, the 1995 amended return also
reported an incorrect amount of income.
In addition, Ms. Enerson credibly testified that she felt
there was an understanding between herself and petitioners that
she should not provide the information regarding income from the
extras to Mr. Gunderson. Mrs. Payne helped Ms. Enerson gather
information for Mr. Gunderson. Mrs. Payne testified that at some
point she knew that Mr. Gunderson had requested only bank
records. Mrs. Payne knew the extras were not deposited in the
bank; she helped separate out the checks for Mr. Payne to cash.
Petitioners’ assertion of ignorance is merely an attempt to
absolve themselves of blame by attributing responsibility to
their bookkeeper.
In addition, petitioners’ behavior with respect to their
income shows multiple badges of fraud. Mr. Payne pleaded guilty
under section 7206(1) to willfully filing a false tax return for
1994. As a result, Mr. Payne is estopped from arguing that he
did not willfully file a false return for 1994. See Wright v.
Commissioner, 84 T.C. at 639. Although the estoppel is not
extended to petitioners’ fraudulent intent to evade tax,
respondent has shown clear and convincing evidence that
petitioners intended to evade tax for the years in issue. HRDC’s
accounts receivable journal and bank deposit records both omitted
the income HRDC earned from extras and did not accurately reflect
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