C. Richard Roose, Jr. and Betty B. Roose - Page 11

                                       - 11 -                                         
          records to Reed, petitioners succeeded in understating their                
          income in each of the years in issue.                                       
               Petitioners have made various implausible and false                    
          statements.  Mr. Roose falsely stated to a revenue agent in the             
          course of the IRS examination that he wrote checks from the Bank            
          One account to the Middlefield account to place the credit card             
          sales receipts back into the business account.  Mr. Roose also              
          stated during the IRS examination that it was an industry                   
          practice not to report coupon redemption income and, in an                  
          attempt to explain his failure to report, that he was using these           
          funds to build a retirement account.  Both of these arguments are           
          without merit and, moreover, indicate a fraudulent intent.                  
          Petitioners' special manual system for depositing payments on               
          accounts received by mail has not been reasonably explained.                
          Mr. Roose's explanation that he used the manual system because it           
          "saved time" is implausible in light of his admission that he               
          used cash registers in the store because they produced accurate             
          records.  Furthermore, Mrs. Roose stated that she used only the             
          Daily Cash Reports to complete the Drug Topics book but could not           
          offer an explanation as to how certain deposits not appearing on            
          the Daily Cash Report appeared in the Drug Topics book.                     
               Petitioners state that their reliance on Reed to prepare               
          their tax returns shows a lack of fraudulent intent.  For                   
          petitioners to prevail on their reliance argument, however, they            
          must have provided the accountant with full and correct                     

Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  Next

Last modified: May 25, 2011