T.C. M em o . 2 0 1 6 -2 3 1

UNITED STATES TAX COURT
NATHAN A. PEAKE, Pet i t i o ner v . COM M ISSIONER OF INTERNAL REVENUE, Res po n d en t

Do ck etNo . 1 3 8 7-1 5. Fi l edDecem b er 2 1 , 2 01 6
.

Nat h an A. Peak e, p ro s e. W i l l i am J . Greg g , fo r res p o n d en t.

M EM ORANDUM OPINION CHIECHI, J ud g e: Th is cas e i s b efo re u s o n res p on d en t ’ s m o t i o nt o d i s m i s s fo r l acko f p ro s ecu ti o n(res p on d en t ’ s m o ti on ). W e s h al l g ran tres p o n d en t ’ s
m o ti o n .- 2
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[* 2 ] Back g ro u n d M an y o f t h e fact s are d eem edes t ab l i s h edp u rs u an tt o Ru l e 9 0 (c). 1 Th e
reco rdes t ab li s hes an d/o r p et i t io n er d o es n o td i s p u t e cert ai no th er fact s . Pet i t i o ner res i dedi n M ary l an datth e t i m e h e fi l edthe p et i t i o n . Ata t i m e n o tes t ab l i s h edb y th e reco rd , p et i t i o n er fo rm ed(1 ) Peak e M an ag em en t Gro up (PM G ) t o rep res en t p ro fes si o n al at h l et es , (2 ) Peak e En t erp ri s es (PE) t o p ro v i d e h i s p ers o n al s erv ices t o p ro fes si o n al at h l et es , an d (3 ) Peak e Co n st ru ct i o n . Du ri n g p et i t i o ner’ s t ax ab l e y ears 2 0 02 , 2 0 0 3 , 2 00 4 , 2 0 0 5, 2 0 0 6 , an d 2 0 0 7 , th e y ears ati s s u e, p et i t i o n er recei v edth e fo l lo wi n g am o u n t s o f t ax ab l e i n co m e fro m PE:

1 Al l Ru l e referen ces are t o th e Tax Co u rtRu l es o f Pract i ce an dPro cedu re. Al l s ect i on referen ces are t o th e In t ern al Rev en ue Co de (Co d e) i neffect fo r t h e y ears ati s s u e.- 3
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[* 3 ] Year Am o u n t 2 0 0 2 $ 72 8 , 8 1 1.4 5 2 0 0 3 7 7 3 , 0 0 0.0 0 2 0 0 4 9 7 1 , 9 9 5.3 0 2 0 0 5 6 8 8 , 9 6 4.3 5 2 0 0 6 5 5 0 , 4 4 4.8 0 2 0 0 7 5 4 9 , 0 0 0.0 0 To t al 4 ,2 6 2 ,2 1 5 .9 0 Pet i t i o ner’ s t o t al i n co m e fo r each o f th e y ears ati s s u e (s h o wn ab o v e)
co n si s t edo f (1 ) cas h wi th drawal s fro m PE (cas h wi th drawal s ), (2 ) ch eck s i s s u ed
an d/o r acco u n ttran sfers fro m PE t o p et i ti o n er, p et it i on er’ s fam il y , an d/o r t h i rd p art i es o np et i t i o n er’ s b eh al f (ch eck s i s s uedan d/ or acco u n t tran s fers ), an d/ o r (3 ) d i s tri b u t i o ns fro m

PE t o p et i t i o n er an d/ o r Peak e Co n s tru ct i o nthatwere l ab el ed l o an s (p u rp o rt edl o an s ). Pet i t i o ner d i dn o th av e an y Fed eral i n co m e t ax (t ax ) wi th h el dfo r an y o f h i s t ax ab l e y ears 2 0 0 2, 2 0 0 3 , 2 0 0 4, 2 0 0 5 , 2 0 06 , an d2 0 0 7 . No r d i dp et i t i o ner m ak e
an y es t i m at edt ax p aym en t s wi th res p ectt o an y o f t ho s e y ears . W i th res p ect t o th e cas h wi th drawal s , du ri ng p et i ti o n er’ s t ax ab l e y ears 2 0 0 2, 2 0 0 3 , 2 0 0 4 , 2 0 0 5, 2 0 0 6 , an d 2 0 0 7 , p et i t i o n er recei vedt ax ab l e i n co m e as a res u l t- 4
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[* 4 ] o f t h e fo l l o wi ng cas h wi th drawal s fro m PE, each o n e o f wh i ch was i nan
am ou n tl es s th an$ 10 ,0 0 0 :

Year Nu m b er o f Cas h W i th drawal s T o tal Am o u n t 2 00 2 4 7 $ 2 4 7,9 5 0 2 00 3 3 0 2 4 1,5 0 0 2 00 4 1 0 8 1,5 0 0 2 00 5 4 4 3 7 1,2 0 5 2 00 6 3 2 2 3 9,4 2 5 2 00 7 2 1 6,0 0 0 To t al 1 6 5 1 ,1 9 7,5 8 0 PE d i dn o ti s s u e t o p et i t io n er fo r an y o f p et i t io n er’ s t ax ab le y ears ati s s u e Fo rm W -2 , W ag e an dTax St at em en t(Fo rm W -2 ), o r Fo rm

1 0 9 9 -M ISC, M i s cel lan eo u s In co m e (Fo rm 1 0 9 9 -M ISC), wi th res p ectt o an y o f p et it i o n er’ s cas h wi th drawal s . W i th res p ect t o th e ch eck s i s s ued an d/ o r acco u n t tran s fers , du ri n g 2 0 0 2 u n t i l atl eas t Oct o b er 1 5 , 2 0 0 6, PM G earn edi n co m e fro m i t s cl i en t s i nth e fo rm

o f
m an ag em en tfees (PM Gi n co m e). Du ri n g th ats am e p eri o d , p et i ti o n er d i rect ed (1 ) PM G t o reco rdi n PM G’ s b o o k s an dreco rd s o n ly th e ex pen s es as s oci at edwi th
earn i n g th e PM G i n co m e; (2 ) PE t o reco rdth e PM G i n co m e i nPE’ s b o o k s an d
reco rd s ; (3 ) PE t o p ay

thatPM G i n co m e t o p et i t i o ner, p et i t i o n er’ s s p o us e, an d/ o r- 5
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[* 5 ] th i rdp art i es o np et i t io ner’ s b eh al f t h ro u g h t h e i s s u an ce o f ch eck s ; an d(4 ) PE t o d es i g n at e i nPE’ s b o o k s an dreco rd s th os e p aym en t s o f PM G i n co m e t o p et i t i o n er, p et i t i on er’ s s po u s e, an d/ o r t h i rdp art i es o np et i t i o ner’ s b eh al f as

“ Co n s ul t i n g fees ”. Du ri ng p et i t i o n er’ s t ax ab l e y ears 2 00 2 , 2 0 0 3 , 2 0 0 4 , 2 0 0 5 , 2 0 0 6 , an d2 0 0 7 , p et i ti o n er recei v edt ax ab l e i n co m e as a res u l to f t h e fo l lo wi n g ch eck s i s s u edan d/ o r acco u n ttran s fers fro m PE t o p et i t i o n er, p et i t i o n er’ s fam i l y , an d/o r t h i rdp art ies o np et i t i on er’ s b eh al f:

Year Ch eck s Is s u ed an d/ o r Acco u n tTran s fers 2 00 2 $ 4 8 0 ,8 6 1 .4 5 2 00 3 5 3 1 ,5 0 0 .0 0 2 00 4 8 6 0 ,4 9 5 .3 0 2 00 5 3 0 8 ,7 5 9 .3 5 2 00 6 2 7 8 ,5 1 9 .8 0 2 00 7 3 8 5 ,5 0 0 .0 0 To t al 2 ,8 4 5 ,6 3 5 .9 0 PE d i dn o ti s s u e t o p et i t io n er fo r an y o f p et i t io n er’ s t ax ab le y ears ati s s u e Fo rm W -2 o r Fo rm 1 0 9 9-M ISC wi th res p ectt o an y o f t he ch eck s i s s u ed an d/ o r
acco u n t tran sfers
. W i th res p ect t o th e p urp o rt edl o an s , du ri n g p et i t i on er’ s t ax ab l e y ears 2 0 0 2, 2 0 0 3 , 2 0 0 4 , 2 0 0 5, 2 0 0 6 , an d 2 0 0 7 , p et i t i o n er recei vedt ax ab l e i n co m e as a res u l t- 6
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[* 6 ] o f t h e fo l l o wi ng d i s tri b u t i o n s fro m PE t o p et it i on er an d/ o r Peak e Co n s tru ct i o nthatwere l ab el ed l o an s : Year Pu rp o rt edLo an s 2 0 0 2 -0
- 2 0 0 3 -0
- 2 0 0 4 $ 3 0,0 0 0 2 0 0 5 9 ,0 0 0 2 0 0 6 3 2 ,5 0 0 2 0 0 7 1 4 7,5 0 0 To t al 2 1 9,0 0 0 PE d i dn o ti s s u e t o p et i t io n er fo r an y o f p et i t io n er’ s t ax ab le y ears ati s s u e Fo rm W -2 o r Fo rm 1 0 9 9-M ISC wi th res p ectt o an y o f p et i t i o n er’ s p u rp o rt edl o an s . Pet i t i o ner fi l edFo rm

1 0 4 0 , U.S. In d i v idu al In co m e Tax Retu rn (retu rn ), fo r h i s t ax ab l e y ear 2 0 0 0 (2 00 0 retu rn ). As o f t h e t i m e o f t h e ev i den t i ary h eari n g i n th i s cas e (d i s cu s sedb el o w), p et i t i o n er h adn o tfi l edan y retu rn aft er h e fi l edh i s 2 0 0 0 retu rn . 2

2 In 2 0 0 3 , p et i t i o ner h i reda cert i fi edp ub l i c acco u n t an t(C.P.A.) t o p rep are o n e o r m o re o f h i s retu rn s . Al th o u g h th atC.P.A. p rep areda retu rnfo r atl eas to n e o f p et i ti o n er’ s t ax ab l e y ears 2 0 0 3 , 2 0 0 4 , 2 0 0 5 , o r 2 0 06 , p et i t i o ner d idn o t fi l e a retu rn fo r an y

t ax ab l e y ear aft er t ax ab l e y ear 2 0 0 0
.- 7
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[* 7 ] OnM arch 1 7 , 2 0 1 1 , p et it i o n er en t eredi n t o a p l ea ag reem en ti nth e U.S. Di s tri ctCo u rtfo r t h e Di s tri cto f Co l u m b ia (U.S. Di s tri ctCo u rt ) i nwh i ch h e p l ead ed gu i l ty t o tax ev as io nu nd er s ect i o n7 2 0 1 wi th res p ectt o h i s t ax ab l e y ear 2 0 0 4 . Inth atp lea ag reem en t , p et i t i o n er al s o p l ead edg ui l ty t o co n s p i racyt o
co m m i tb an kan d wi re frau du nd er 1 8 U.S.C. s ec. 3 7 1 . OnOct ob er 3 1 , 2 01 1 , th e U.S. Di s tri ctCo u rt , i n t er al i a, s en t en ced p et it i on er t o 3 6 m o n th s i np ri s o nwi th two y ears o f s up erv i s edrel eas e. Res p o n d en ti s su eda n o t i ce o f d efi ci en cy (n o t i ce) t o p et i t i o n er wi th res p ect t o h i s t ax ab l e y ears 2 0 0 2, 2 0 03 , 2 0 0 4 , 2 0 0 5 , 2 00 6 , an d2 0 0 7 . Inth atn ot i ce,
res p o n d en t d et erm i nedth e fo l l o wi n g d efi ci en ci es i n , an dad d i t i o ns u n d er s ect i o ns 6 6 5 1 (a)(2 ) an d(f) an d6 6 54 (a) t o , p et i t i o n er’ s t ax : Ad d i t i o n s t o Tax Un der Year Defi ci en cy Sec. 6 6 51 (a)(2 ) Sec. 6 6 5 1 (f) Sec. 6 6 5 4 (a) 2 0 0 2 $ 2 6 5 ,1 8 6 $ 6 6,2 9 6 .5 0 $ 1 9 2,2 5 9 .8 5 $ 8 ,8 6 1 .7 4 2 0 0 3 2 5 6 ,4 9 1 6 4,1 2 2 .7 5 1 8 5 ,9 5 5.9 8 6 ,6 17 .7 8 2 0 0 4 3 2 5 ,8 2 2 8 1,4 5 5 .5 0 2 3 6 ,2 2 0.9 5 9 ,3 37 .1 1 2 0 0 5 2 2 6 ,4 1 9 5 6,6 0 4 .7 5 1 6 4 ,1 5 3.7 8 9 ,0 82 .0 3 2 0 0 6 1 7 7 ,0 9 4 4 4,2 7 3 .5 0 1 2 8 ,3 9 3.1 5 8 ,3 80 .7 9 2 0 0 7 1 7 5 ,9 8 4 4 3,9 9 6 .0 0 1 2 7 ,5 8 8.4 0 8 ,0 09 .5 4- 8
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[* 8 ] In th e n ot ice, res p o nd en tal s o d et erm i ned i nth e al t ern at i v e t o res p on d en t ’ s d et erm i n at i o n u n d er s ect i on 6 6 5 1 (f) t hatp et i ti o n er i s l i ab l e fo r an ad d i t i o nt o t ax
u n d er s ect i o n6 6 5 1 (a)(1 ). Fro m Sep t em b er 9 , 2 0 1 5 , u nt i l earl y

Feb ru ary 2 0 1 6 , res p o nd en t ’ s co u n s el
m ad e rep eat edat t em

p t s t o co n t actp et it i on er i no rd er t o p rep are t h i s cas e fo r t ri al
an d/o r t o at t em

p t t o s et t l e i t . Pet i t i o n er was co m p l et el y u nres p o ns i v e t o th os e at t em p t s . Th i s cas e was cal l edfro m th e cal en dar fo r t h e t ri al s es s io nth atb eg an o n Feb ru ary 8 , 2 0 1 6 , i nBal t i m o re, M ary l an d (Feb ru ary 8 , 2 0 1 6 Bal t i m o re t ri al
s es s i on ). Co u n s el fo r res p o n d en tap p eared . Th ere was n o ap p earan ce b y o r o n b eh al f o f p et i t i o n er. Res po nd en tfi l edres po n d en t’ s m ot io n . Th i s cas e was recal ledfo r an ev i d en t i ary h eari n g wi th res p ectt o res p o n d en t’ s m o t i o n . 3 Co u n s el fo r res p o nd en tap p eared . Th ere was n o ap pearan ce b y o r
o nb eh al f o f p et i t io n er.

3 It was at th e req u es to f res p o n d en t th at we h el d an ev i d en t i ary h eari n g o n Feb ru ary 8 , 2 0 1 6 (Feb ru ary

8 , 2 0 1 6 ev id en t i ary

h eari n g). Atth ath eari n g , res p o n d en t p res en t edev i d en ce fo r p et i ti o n er’ s t ax ab l e y ears 2 0 0 2 , 2 0 0 3 , 2 0 0 4 , 2 0 0 5 , 2 0 0 6 , an d 2 0 0 7 wi th res p ectt o the res p ect iv e ad d i ti o ns t o t ax u n d er s ec. 6 6 5 1 (f) t h at res p o n d en th add et erm i n edfo r t ho s e y ears .- 9
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[* 9 ] Di s cu s s i o n Pet i t i o ner b ears th e b u rd en o f p ro vi n g erro r i n res po n d en t’ s d efi ci en cy d et erm i n at i o n an dres p o n den t ’ s d et erm i nat i o n s u n der s ect i o n s 6 65 1 (a)(2 ) an d 6 6 5 4 (a) wi th res p ectt o each o f h i s t ax ab l e y ears 2 0 02 , 2 0 0 3 , 2 0 0 4, 2 0 0 5 , 2 0 0 6 , an d 2 0 0 7 . See Ru l e 1 4 2 (a). Onth e reco rdb efo re u s , we fi n dth at p et i t io n er h as fai l edt o carry h i s b u rd eno f es t ab l is h in g an y erro r i nres p o n d en t ’ s d efi ci en cy d et erm i nat i o n an d
res p o n d en t’ s d et erm i n at i o n s u n d er s ect i o n s 6 6 51 (a)(2 ) an d 6 6 5 4 (a) wi th res p ect t o each o f h i s t ax ab l e y ears 2 0 0 2 , 2 0 0 3 , 2 00 4 , 2 0 0 5 , 2 0 0 6 , an d 2 0 0 7 . Onth atreco rd , we s u st ai nth o s e d et erm i n at i on s . W e ad dres s n o wres po nd en t ’ s d et erm i n at i o nth atp et i t i o n er i s l i ab l e fo r t h e ad d it i o nt o t ax u n der s ect i o n6 6 5 1 (f) fo r frau du l en t fai lu re t o fi l e a ret u rn wi th
res p ectt o each o f h i s t ax ab le y ears 2 0 0 2 , 2 0 0 3 , 2 0 0 4, 2 0 0 5 , 2 0 0 6 , an d 2 0 07 . In
o rd er fo r t h atad d it i o nt o t ax t o ap p l y , we m u s tco ns i d er es s en t i al ly

th e s am e
m at t ers th atare i n v o l v edi nd et erm i n in g wh et h er a t ax pay er i s l i ab l e fo r t he frau d p en al ty u n d er s ect i o n6 6 6 3 an di t s p red eces s o r p ro v is io n , s ect i o n 6 6 5 3 (b ). See Cl ayt o nv . Co m

m i ss io n er, 1 0 2 T.C. 6 3 2 , 6 53 (1 99 4 ). Co ns equ en t l y , as i s req u i red fo r p u rp o s es o f s ect i on 6 6 6 3 , th e Co m m i s s i o n er o f In t ern al Rev en ue (Co m m i s s i on er) m u s tp ro v e b y

cl ear an dco n v i n ci n g ev i d en ce fo r p u rp o s es o f s ect i o n- 1 0 -

[* 1 0 ] 6 6 5 1 (f) t h atan u n d erp aym en t ex i s t s fo r th e y ear i n qu es ti o nan dth atth e fai l u re t o fi l e a ret u rn fo r t h aty ear was due t o frau d. See s ecs . 7 4 5 4 (a), 6 6 5 1 (a)(1 ), (b )(1 ); Ru le 1 4 2 (b ); s ee al s o Cl ayt o n v . Co m m i s s io n er, 1 0 2 T.C. 6 3 2
. Th e Co m m i ss i o n er i s n o trequ ired , h o wev er, t o p ro v e t h e p reci s e am o u n to f t h e
u n d erp aym en t . E.g
. , Di L eo v . Co m m i s s i o ner, 9 6 T.C. 8 5 8, 8 7 3 (1 9 9 1), aff’ d , 9 5 9 F.2 d1 6 (2 dCi r. 1 9 9 2). To p ro v e t h e ex i s t en ce o f an u nd erp aym en t , th e Co m m i s s i o n er m ay

n o trel y o na t ax p ay er’ s fai l u re t o carryh is o r h er b urd en o f p ro o f wi th res pect t o th e u n d erl y i n g d efi ci en cy . E.g ., Park s v . Co m m i ss i o n er, 9 4 T.C. 6 5 4 , 6 6 0 -6 61 (1 9 9 0). M o reo v er, i f t h e Co m m i s s i o n er es t ab l i s h es b y cl ear
an d co n v i n ci n g ev i den ce fo r p u rp o s es o f s ect i o n6 6 5 1(f) t h atan y p o rt io no f an
u n d erp aym en t i s at tri b u tab l e t o frau d , th e en t ire u n d erp aym en ti s t o b e treat edas at tri b u t ab l e t o frau d , ex cep twi th res p ectt o an y p o rt i o no f t he u n d erp aym en tth at th e t ax p ay er es t ab l i s hes b y a p rep on d eran ce o f t he ev i d en ce i s n otat tri b u t ab l e t o frau d. E.g ., Go o dv . Co m m i s s io n er, T.C. M em o . 2 0 1 2 -3 2 3 , at* 4 4
. Onth e reco rdb efo re u s , we fi n dth at res p on d en th as es t ab li s hedb y cl ear
an d co n v i n ci n g ev i den ce t h atth ere i s an u n d erp aym en to f t ax wi th res p ectt o each
o f p et i ti o n er’ s t ax ab l e y ears 2 0 0 2 , 2 0 0 3 , 2 0 0 4 , 2 0 0 5 , 2 0 06 , an d 2 0 0 7
. In o rd er t o p ro v e frau du l en t i n t en t , th e Co m m i s s i o n er m

u s tp ro v e b y

cl ear
an d co n v i n ci n g ev i den ce t h atth e t ax p ay er i n ten d ed t o ev ad e t ax , wh i ch th e- 1 1 -

[* 1 1 ] t ax p ay er b el i ev edt o b e o wi n g , b y co ndu cti n t en d edt o co n ceal , m i s l ead , o r
o th erwi s e p rev en tthe co l l ect i o no f s u ch t ax . E.g ., Park s v . Co m m i s s io n er, 9 4 T.C. at6 6 1
. Th e ex i s t en ce o f frau di s a qu es t i o no f fact t o b e res o l v edup on
co n si d erat io no f t h e en t i re reco rd . E.g ., Di Leo v . Co m m is s i o n er, 9 6 T.C. at8 7 4
. Frau di s n ev er p res u m edo r i m p u t edan ds h o ul d n otb e fo u n d i nci rcu m s t an ces wh i chcreat e atm os to n l y a s u s p i ci o n . E.g ., Pet zo l d tv . Co m m i s s i o ner, 9 2 T.C. 6 6 1 , 6 9 9 -7 0 0 (1 9 89 ). Di rect ev i d en ce o f t h e req u i s i t e frau du l en ti n t en ti s s el d o m
av ai l ab l e. E.g
. , i d . Th e Co m m i s s i o n er m ay

p ro v e frau d b y

ci rcu m s t an t i al
ev i d en ce. E.g
. , Ro wl ee v . Co m m i s s i o n er, 8 0 T.C. 1 1 1 1, 1 1 2 3 (1 9 8 3 ). Th e co u rt s h av e i d en t ifi eda n u m b er o f s o -cal l ed b ad g es o f frau d fro m wh i chfrau du l en ti n t en t m ay b e i n ferred , i n cl u d i ng (1 ) t h e fai l u re t o m ai n tai n ad equat e b o ok s an dreco rd s as requ i redb y th e Co d e an dth e reg u l at i o n s , (2 ) d eal i ng i ncas h , (3 ) act s d es i g n edt o co n ceal i n co m e, (4 ) t he fai l u re t o fi l e a retu rn , (5 ) t h e co n s is t en tan d s ub s t an t i al u n ders t at em en to f i nco m e, (6 ) a
co n vi ct i o nfo r t ax ev as i o nu n d er s ect i on 7 2 0 1, (7 ) a co n v i ct i o n fo r o ther i l l eg al act i vi ty , (8 ) t h e fai l u re t o co o p erat e wi th th e Co m m i s s i o n er’ s rep res en t at iv es , an d (9 ) t h e fai l ure t o ap p ear fo r t ri al . See, e.g ., Brad fo rdv . Co m m i s s i o n er, 7 96 F.2 d 3 0 3 , 3 0 7 (9 th Ci r. 1 9 8 6 ), aff’ g T.C. M em o. 1 9 8 4 -6 0 1 ; Ru ark v . Co m m i s s io n er, 4 4 9 F.2 d3 1 1, 3 1 2 -3 13 (9 th Ci r. 1 9 7 1 ), aff’ g p er cu ri am T.C. M em o . 1 9 6 9 -4 8 ;- 1 2 -

[* 1 2 ] Ni edri ng h au s v . Co m m i s s i o n er, 9 9 T.C. 2 0 2 , 2 11 (1 9 9 2 ); Park s v . Co m m i s s i o n er, 9 4 T.C. at 6 6 4 -6 6 5 ; Sm i th v . Co m m i s s i o n er, 9 1 T.C. 1 0 4 9 , 1 0 5 9
- 1 0 6 0 (1 9 8 8 ), aff’ d , 9 2 6 F.2 d1 47 0 (6 th Ci r. 1 9 9 1); M cGee v . Co m m is s i o n er, 6 1 T.C. 2 4 9 , 2 6 0 (1 9 7 3 ), aff’ d , 5 1 9 F.2 d 1 1 2 1 (5 th Ci r. 1 9 7 5 ); Ti p t on v . Co m m i s s i o n er, T.C. M em o . 1 9 9 4 -6 2 4 , 1 9 94 W L 7 0 6 7 0 4, at* 7 ; W i l so n v . Co m m i s s i o n er, T.C. M em o . 1 9 9 4 -4 5 4 , 1 9 94 W L 4 8 3 9 0 0, at* 6 ; M o b l ey v . Co m m i s s i o n er, T.C. M em o . 1 9 9 3 -6 0 , 1 9 9 3 W L 4 2 8 3 6 , at* 5 , aff’ dwi th o u t p ub l i s h edo p i n i o n, 3 3 F.3 d1 3 8 2 (1 1 th Ci r. 1 99 4 ); Reg i s t er v . Co m m i s s i o n er, T.C. M em o. 1 9 9 0 -5 7 6 , 1 9 90 W L 1 6 8 1 7 0 . Al th o ug h n o s i n g l e fact o r i s n eces sari l y
s u ffi ci en tt o es t ab l i sh frau d , th e ex i s t en ce o f s ev eral i nd i ci a co n st i tu t es p ers u as iv e ci rcu m s t an t i al ev i d en ce o f frau d . E.g ., Pet zo l dtv . Co m m i ss i o ner, 9 2 T.C. at7 0 0. In th e p res en t cas e, fo r the t ax ab l e y ears ati s su e (ex cep tas i n d i cat edb el o w) p et i t i o n er (1 ) fai l ed t o m ai n t ai nad equ at e b o o k s an dreco rd s as requ i redb y th e Co d e an dthe reg u l at io n s ; (2 ) recei v eds ub s t an t i al cas h wi th drawal s; (3 ) s tru ctu redh i s cas h wi th drawal s s o th ateach s u ch wi th drawal was i n an am o u n t l es s th an$ 1 0 , 0 0 0 i nan at tem p tt o av o i dcert ai nFed eral rep o rt i n g req u i rem en t s ; (4 ) kn ew t h ath e was requ iredt o fi l e ret u rn s b u twi l l fu l l y d i dn o tfi l e ret u rn s ; (5 ) co n s i s t en t l y

an ds ub s t an t i al l y

u n d ers t at edi n co m e; (6 ) was co n vi ct edu n d er
s ect i on 7 2 0 1 fo r t ax ev as i o n wi th res p ectt o h i s t ax ab l e y ear 2 0 0 4 ; (7 ) was- 1 3 -

[* 1 3 ] co nv i ct edu n der 1 8 U.S.C. s ec. 3 7 1 fo r co n s pi racyt o co m m i t b an kan dwi re frau d; (8 ) co m

pl et el y fai l edb efo re t h e Feb ru ary 8 , 2 0 1 6 Bal t im o re t ri al s es s i o nt o
co o perat e wi th res p o n d en t’ s co u n s el i no rd er t o p rep are t h i s cas e fo r t ri al an d/ o r t o at t em p tt o s et t l e i t ; an d(9 ) fai l edt o ap p ear at th e cal l o f t hi s cas e fro m th e cal en d ar fo r t h e Feb ru ary 8 , 2 0 1 6 Bal t i m o re t ri al s es s io nan d atth e recal l o f t h i s
cas e fo r t h e Feb ru ary

8 , 2 0 1 6 ev i d en t i ary

h eari n g . Onth e reco rdb efo re u s , we fi n dth at res p on d en th as es t ab li s hedb y cl ear
an d co n v i n ci n g ev i den ce t h atp et i t i o n er i n t en d edt o ev ad e t ax wi th res p ect t o each
o f h i s t ax ab l e y ears 2 0 0 2 , 2 0 0 3, 2 0 0 4 , 2 0 05 , 2 0 0 6 , an d2 0 0 7 , wh i chh e b el i ev edt o b e o wi n g , b y co n du cti n t en d edt o co n ceal , m i s lead , o r o th erwi s e p rev en t th e
co l l ect i o no f s u ch t ax . On th atreco rd , we fu rt h er fi n dth at res p on d en th as
es t ab l i s h edb y cl ear an dco n v i n ci n g ev i d en ce t h at p et it i on er i s l i ab l e fo r t h e ad d it i o nt o t ax u n der s ect i o n6 6 5 1 (f) fo r each o f t h o s e y ears . To refl ectthe fo reg o i n g , Ano rd er g ran t in g res p o n d en t’ s
m o t i o nan d d eci si o n fo r res p o nd en twi l l b e
en t ered
.