Abdul Khaliq Mustafa Muhammad, T. C. Memo. 2023-124, filed 10/17/23, “…previously worked as a tax return preparer. He holds five educational degrees, including a master’s in business administration and a Juris Doctor with an alleged specialty in international taxation.” T. C. Memo. 2023-124, at p 2.

Impressive. And Abdul also has fifteen (count ’em, fifteen) years in as an employee of IRS.

Trouble is, Abdul also has heavy-duty Schedule C losses with no substantiating documentation. He claims water damage and computer crashes wiped them out, but Judge Albert G (“Scholar Al”) Lauber, though he has only three (count ’em, three) educational degrees, isn’t buying any of Abdul’s stories why the Rule 37(a) deemed-admitted order should be set aside, or that the unreported income IRS alleges he got was not taxable.

But although Abdul has accumulated some demerit badges of fraud, they’re not enough for Judge Scholar Al to award IRS summary J on the Section 6663 chops.

“We have deemed petitioner to have admitted certain affirmative allegations relating to possible ‘badges of fraud,’ e.g., that he was uncooperative with the RA during the examination, that he failed to supply accurate books and records of his Schedule C business, and that (as an IRS employee and former return preparer) he was aware of the requirement that he keep books and records. However, we do not think that these admissions alone are sufficient to satisfy respondent’s burden of proving fraud by clear and convincing evidence. Petitioner alleges (for example) that he was unable to supply books and records to the RA because those records had been destroyed by water damage. Such a fact, if true, could tend to support petitioner’s contention that he lacked the subjective intent to commit fraud.” T. C. Memo. 2023-124, at p. 8.

But before Abdul puts the appropriate beverage on ice, “(T)hose penalties remain for trial, as do respondent’s disallowance of Schedule C and other deductions and his alternative assertion of accuracy-related penalties under section 6662(a).” T. C. Memo. 2023-124, at pp. 8-9.

Btw, Abdul, allegations that what the RA did at exam invalidates the SNOD don’t fly in a de novo deficiency trial. T. C. Memo. 2023-124, at p. 9, footnote 2.

Edited to add, 7/15/25: Abdul goes down for Section 6663 fraud chops for two (count ’em, two years at issue, T. C. Memo. 2025-77, 7/15/25.