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would result in a lower tax liability. Petitioner, therefore,
argues that Atkinson did not have the intent to evade
petitioner’s taxes. Between November 1984 and January 1985 and
before the preparation of petitioner’s corporate tax return for
the taxable year ending March 31, 1985, Atkinson attended a
meeting with petitioner’s accountants. At that meeting, the
accountants advised Atkinson that petitioner’s compensation
expenses for Atkinson’s services had to be justified for the
expenses to be deductible for Federal tax purposes. Petitioner’s
corporate tax returns reported significant amounts for Atkinson’s
compensation, and petitioner declared only minimal dividends to
Atkinson. These facts show that petitioner paid most of its
earnings to Atkinson in the form of compensation instead of
dividends to minimize its corporate tax liability. Based on the
evidence, we conclude that Atkinson was aware that petitioner
could not deduct dividends declared on its corporate tax returns.
Petitioner also argues that even if we find that Atkinson
intended to evade petitioner’s Federal income taxes, the U.S.
Court of Appeals for the Ninth Circuit, to which this case is
appealable, requires that the Commissioner prove that “there is
no doubt, beyond a frivolous one, regarding the substantive tax
treatment of the item at issue”. Petitioner cites United States
v. Dahlstrom, 713 F.2d 1423, 1427 (9th Cir. 1983), for the
proposition that if the tax law is unsettled, a taxpayer lacks
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