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Mr. Black attempted to conceal assets by placing title to
the assets in his wife’s name. At trial, Mr. Black testified
that he placed title to property solely in his wife’s name so
that his creditors would not be able to reach it.
Finally, petitioners provided implausible or inconsistent
explanations to explain the discrepancy in the net worth
calculations; namely, that they had a cash hoard of $500,000.
As discussed above, we do not find any of the testimony presented
regarding the cash hoard to be credible.
C. Conclusion
We conclude that the record shows by clear and convincing
evidence that petitioners understated their income and overstated
deductions and that there are sufficient badges of fraud to show
that understated income and overstated deductions are due to Mr.
Black’s fraudulent intent. Petitioners have failed to prove any
portion of the underpayment is not attributable to fraud.
Accordingly, we hold that section 6501(a) does not bar the
assessment and collection of taxes for 1991 and 1992 and that Mr.
Black is liable for the fraud penalty pursuant to section 6663.
2. Amount of the Deficiency
Although petitioners conceded some unreported gross income,
petitioners did not concede the deficiencies determined by
respondent. Petitioners contend they are entitled to a number of
adjustments to gross income not allowed by respondent.
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