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the balance in the account, disclosed the account on YOC's books
and records, and after the criminal tax investigation was
initiated, began to pay interest on the account.
With regard to the Capriole and the Sea Ray Boat, we
conclude that adjustments relating thereto are attributable to
fraud. The Capriole and the Sea Ray Boat effectively constituted
Elvin's personal assets, and YOC held mere nominal legal title
thereto. Elvin used the Capriole and the Sea Ray Boat
exclusively for personal use. All of the expenses incurred by
YOC for the Capriole and the Sea Ray Boat related to Elvin's
personal use. Elvin created false documentation to make it
appear as if YOC received the Capriole in trade for a new
automobile.
The adjustments relating to the motor home are not
attributable to fraud. The motor home was received by YOC in
trade on a new automobile in a valid business transaction. YOC
owned the motor home. There is evidence in the record that the
motor home was used some of the time for business purposes.
The adjustments relating to the Sylva Residence are not
attributable to fraud. Petitioners presented some evidence to
the effect that the $65,000 transferred by YOC to purchase the
Sylva Residence represented a loan to NRDC instead of a
constructive dividend to Elvin. Essentially, simultaneously with
the transfer of the $65,000, a $50,000 repayment was made by
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