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at issue; (7) petitioner failed to timely file returns for the years at issue; and (8) petitioner engaged in extensive dealings in cash during the years at issue[1]
a. Understating Income
A pattern of substantially underreporting income for several years is strong evidence of fraud, particularly if the reason for the understatements is not satisfactorily explained or due to innocent mistake. See Holland, 348 U.S. at 137-139; Spies, 317 U.S. at 499; Webb v. Commissioner, 394 F.2d at 379.
On her untimely filed returns, petitioner reported taxable income of $9,194, $9,199, $8,972, $8,749, $9,418, $9,145, $9,495, $8,564, and $7,257 for 1998, 1999, 2000, 2001, 2002, 2003, 2004, 2005, and 2006, respectively. Respondent determined that petitioner underreported her taxable income by $269,668, $459,894, $456,154, $370,739, $374,175, $356,994, $702,009, $786,846, and $386,706 for 1998, 1999, 2000, 2001, 2002, 2003, 2004, 2005, and 2006, respectively. We have found that petitioner is responsible for 50% of the net profit attributable to CSE, 50% of the income attributable to deposits into joint accounts, and 100% of the income attributable to deposits into her personal
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- ↑ Respondent also contends that petitioner filed false documents for the years at issue. Because we find that respondent has proven that the other factors are present in this case, we need not address whether petitioner filed false documents for the years at issue.
