John B. Mathers, Sr. - Page 7

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          him and that his failure to file income tax returns reporting               
          that income and to pay tax on the income are due to fraud.                  
               The issues of taxability of the payments and fraud turn on             
          the credibility of petitioner's claim that the disbursements on             
          his behalf were repayments to him of loans previously made to the           
          corporation.  Petitioner's contentions in the context of this               
          case are simply not credible.  He presented no contemporaneous              
          documentation that the distributions for his benefit during the             
          years in issue were intended to be repayments of loans.                     

          Payments for the Benefit of Petitioner                                      
               At trial, the evidence introduced by petitioner consisted              
          primarily of his uncorroborated testimony.  We are not required             
          to accept petitioner's testimony that is improbable or vague.               
          See Geiger v. Commissioner, 440 F.2d 688, 689-690 (9th Cir.                 
          1971), affg. T.C. Memo. 1969-159.  His testimony is contradicted            
          by the minimal records that he created.  The Federal income tax             
          returns prepared by petitioner for FBI do not show a                        
          contemporaneous intent to treat the payments from FBI as loan               
          repayments.  From January 1, 1980, to December 31, 1985,                    
          petitioner showed a reduction of only $36,000 in the loans from             
          stockholders entry on the returns he prepared for FBI, while                
          payments by FBI for petitioner's sole benefit totaled                       
          approximately $239,000 for the same period.  Larger adjustments             
          to the loans from stockholders balance were not reflected until             
          the amended returns were prepared and filed by Burden after the             

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