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Because the Court concludes that Ms. Rhodes did not
purchase items wholesale from Frank’s, or anyone claiming to be
associated with Frank’s, it follows that Ms. Rhodes manufactured
fake purchase orders solely to inflate her Schedule C expenses
for Keepsake. In addition, Ms. Rhodes went to great lengths to
increase her expenses by fabricating trips for both Amway and
Keepsake to purchase supplies, give estimates, make deliveries,
and “prospect”, even going as far as to write places and mileage
on a monthly calendar. She then claimed deductions for car and
truck expenses for both Amway and Keepsake. Ms. Rhodes’s gross
overstatement of her Schedule C expenses establishes fraud.
Drobny v. Commissioner, supra at 1349; Clark v. Commissioner,
supra. Furthermore, the Court has held that keeping inadequate
records, providing implausible or inconsistent explanations of
behavior, dealing in cash, engaging in a pattern of behavior that
indicates an intent to mislead, and failing to cooperate with tax
authorities provides circumstantial evidence that may give rise
to a finding of fraud. Bradford v. Commissioner, supra;
Christians v. Commissioner, supra; Niedringhaus v. Commissioner,
supra. Respondent showed at trial that Ms. Rhodes did each of
these. She fabricated records that were inconsistent with her
claimed deductions. When asked at trial to substantiate the
claimed expenses and deductions, Ms. Rhodes’s explanations were
vague and highly implausible. She claimed to have dealt with
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