Mark N. Wright and Erica Y. Wright - Page 35

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          phony offset of $50,000 against the gross receipts of Wright &              
          Associates on Form 1120S for 1999.  Further, for all of the years           
          in issue, petitioners used an offshore credit card to make                  
          personal expenditures in order to continue to conceal the $54,000           
          in unreported income.                                                       
               For taxable years 1999, 2000, and 2001, Mr. Wright                     
          understated petitioners’ income by failing to include                       
          distributions petitioners received from Wright & Associates,                
          which the Court concludes is fraudulent in and of itself.  Mr.              
          Wright also maintained inadequate records for all of the years in           
          issue.  Additionally, Mr. Wright failed to make estimated tax               
          payments for all of the years in issue.                                     
               The Court concludes that respondent has proved by clear and            
          convincing evidence the second prong of the fraud test for 1999,            
          2000, and 2001.  Respondent has shown that at least some part of            
          the underpayment for all of the years in issue is attributable to           
          fraud.  Specifically, respondent has shown that petitioners                 
          understated their income for all of the years in issue because              
          they fraudulently failed to include in their income distributions           
          from Wright & Associates.  Respondent has also shown that                   
          petitioners concealed their unreported income by utilizing an               
          offshore credit card for personal expenditures.  The Court                  
          concludes that Mr. Wright’s entire course of conduct relating to            
          petitioners’ offshore bank account and credit card is indicative            

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