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that are in conformity with the false documents, there is clear
and convincing evidence of fraud. See Cantor v. Commissioner,
T.C. Memo. 1957-173.
Petitioner relies on Badias & Seijas, Inc. v. Commissioner,
T.C. Memo. 1977-118, to support its position that the backdated
and erroneous minutes should be overlooked when the motivation
for preparing the minutes was mistake or misunderstanding. In
Badias & Seijas, a corporation sold its sole asset, a restaurant.
The shareholder of the corporation made several errors on the
final tax return for the corporation. The errors included
failing to indicate that the corporation had sold its sole asset,
failing to designate the tax return as a final return, and
listing the shareholder as a 50-percent shareholder when he was
the 100-percent shareholder. The Court determined that the
corporation had adopted an informal plan of liquidation
notwithstanding the errors on the tax return, because the errors
did not affect the actual events constituting adoption of the
plan.
The instant case is distinguishable from Badias & Seijas.
The taxpayer's actions in Badias & Seijas conformed to section
337, even if the documents did not. In this case, the minutes
are not merely an inaccurate representation of actual events;
they are a fabrication of events. Briggs knew that he did not
participate in a vote to liquidate ACT on or before the sale date
of the assets to JSL, but he prepared minutes to the contrary.
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