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practice of concealing income by providing only bank statements
and records to their tax return preparer and converting checks
into cash at the Money Exchange. Petitioners did not employ this
practice with respect to the unreported deposits; instead, they
provided their bank information to their tax return preparers.
Therefore, the fraud penalty does not apply to the deficiency
amounts resulting from petitioners’ unreported bank deposit
income in 1993 and 1995. Petitioners have not shown that any
other portion of the deficiencies should not be subject to the
fraud penalty. Therefore, the remainder of the deficiencies for
1993, 1994, and 1995 is subject to the fraud penalty.
To reflect the foregoing, concessions of the parties, and to
give effect to the stipulations by the parties,
Respondent’s Motion for
Leave to Amend the Answer to
Conform the Pleadings to the
Proof is denied as moot, and
Decision will be entered
under Rule 155.
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