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expenditures for personal expenses even though she had nearly
zero cash withdrawals from her bank accounts. In effect,
petitioner consistently drew respondent’s attention to those
areas in which her explanations were less than satisfactory.
Such behavior is hardly consistent with intent “to conceal,
mislead, or otherwise prevent the collection of taxes”. Katz v.
Commissioner, 90 T.C. 1130, 1143 (1988).
Petitioner contradicted herself on a few occasions during
the examination and at trial. However, having had the
opportunity to observe petitioner as a witness at trial, and
considering that many of her contradictions and disclosures could
not have advanced her cause, we do not attribute petitioner’s
contradictions to fraudulent intent. Rather, we attribute them
to a series of misunderstandings and to petitioner’s fear of
governmental attention due to negative experiences with foreign
governments.
Finally, and most importantly, the evidence before us is
sufficiently credible to convince us that petitioner did actually
participate in the kind of intrafamily transactions which would
explain the deposits in her personal accounts, though the record
is not sufficiently detailed to establish that all of the
deposits into petitioner’s personal accounts represent proceeds
from such transactions. We therefore do not sustain respondent’s
imposition of the section 6663 penalty.
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