James Luther Cochrane - Page 19

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          not in business and never had a business of his own or any                  
          interest in a business.  Petitioner also stated that he had never           
          prepared Federal income tax returns for others, or counseled or             
          advised anyone in the preparation of returns.  The facts                    
          established by the deemed admissions demonstrate that these                 
          statements were untrue.  Such failure to cooperate with tax                 
          authorities is further evidence of fraud.  Bradford v.                      
          Commissioner, 796 F.2d 303, 307-308 (9th Cir. 1986), affg. T.C.             
          Memo. 1984-601.                                                             
               We conclude that the record contains clear and convincing              
          evidence of petitioner's fraudulent attempt to evade income taxes           
          for each of the years in issue.  Accordingly, we sustain the                
          additions to tax for fraud.                                                 

          Addition to Tax for Substantial Understatement of Income Tax in             
          1984                                                                        

               Respondent determined that petitioner is liable for an                 
          addition to tax for substantial understatement of income tax                
          under section 6661(a) for 1984.  Section 6661(a) provides for an            
          addition to tax equal to 25 percent of the amount of the                    
          underpayment attributable to a substantial understatement of                
          income tax.  Pallottini v. Commissioner, 90 T.C. 498, 503 (1988).           
          An understatement is substantial if it exceeds the greater of               
          $5,000 or 10 percent of the tax required to be shown on the                 
          return.  Sec. 6661(b)(1)(A).  This amount may be reduced,                   





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