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capacity. Federbush v. Commissioner, 34 T.C. 740, 749 (1960),
affd. 325 F.2d 1 (2d Cir. 1963); DiLeo v. Commissioner, 96 T.C.
858, 875 (1991), affd. 959 F.2d 16 (2d Cir. 1992). It follows
that corporate fraud necessarily depends upon the fraudulent
intent of the corporate officers. Auerbach Shoe Co. v.
Commissioner, 216 F.2d 693 (1st Cir. 1954), affg. 21 T.C. 191
(1953); Federbush v. Commissioner, supra at 749.
Door Control substantially understated its tax liability by
failing to report income diverted to the Gilchrists' personal
bank accounts. Door Control also claimed deductions for the
payment of personal expenses of the Gilchrists. All of these
transactions were concealed from petitioners' return preparer.
In addition, Mr. Gilchrist, in his capacity as an officer of Door
Control, misled Revenue Agent Caid when he told him that
corporate funds were kept separate from personal funds. These
facts establish that Door Control intended to evade taxes
relating to 1986, 1987, and 1988.
On its 1985 return, Door Control claimed a carryback of a
net operating loss from 1988. The reported loss resulted from
Door Control's failure to report $105,891.87 of income. Where a
deficiency is caused by the carryback of a fraudulent loss, the
deficiency is attributable to fraud. Toussaint v. Commissioner,
T.C. Memo. 1984-25, affd. 743 F.2d 309 (5th Cir. 1984). As a
result, we conclude that Door Control intended to evade tax
relating to 1985.
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