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Petitioner maintained inadequate business records. As
stated in the criminal proceeding, petitioner “did not keep many
business records; according to his sons, he merely kept track of
‘some things’ by handwritten notes on scraps of paper.” United
States v. Hoover, 175 F.3d at 566. We find that petitioner’s
failure to maintain adequate business records supports a finding
of fraud.
Petitioner devised a scheme to conceal his income and divert
it to his children with the intent of avoiding income taxes.
Petitioner instructed his customers to issue checks payable to
his children. Petitioner attempted to disguise his farming
income by diverting to his children farming receipts that were
owed to petitioner. We find that this scheme of concealing his
assets provides further evidence that petitioner attempted to
avoid income taxes.
Although a criminal conviction under section 7206 is not
dispositive, it provides probative evidence that the taxpayer
intended to evade taxes. Wright v. Commissioner, 84 T.C. 636,
643-644 (1985). Petitioner was convicted of filing false Federal
income tax returns in violation of section 7206 in 1990, 1991,
and 1992. United States v. Hoover, 175 F.3d at 567. We also
note that petitioner was convicted of making false statements on
a student loan application.
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