- 134 -
points out that petitioners did not always follow the advice of
their advisers.
In all their business planning, petitioners had as a goal
reducing their taxes. Tax reduction is an acceptable goal as
long as the reduction involves transactions with substance and is
by a legal means. Frank Lyon Co. v. United States, 435 U.S. 561,
583-584 (1978). C&L offered tax planning that would reduce
petitioners' taxes. Throughout C&L's engagement with
petitioners, C&L suggested various organizational changes and
structures that would reduce petitioners' taxes. The badges of
fraud occurred after C&L suggested a new organizational structure
or change for petitioners. C&L suggested that petitioners'
organization was a franchise, and backdated documents appeared,
specifically the January 20 and February 1, 1983, agreements.
Those 1983 agreements attempted to substantiate a franchise
arrangement and contained the same language that was in a tax
planning letter that C&L sent to petitioners in 1986. C&L
obtained tax rulings on which company should own the intangibles,
and, subsequently, backdated documents appeared that attempted to
substantiate the chain of sale of the intangibles from TM to
Gatetown to Manver. C&L suggested licensing agreements for the
intangibles, and, subsequently, backdated documents appeared,
containing the same language that was in a draft letter written
6 months after the date on the licensing agreements. C&L
Page: Previous 124 125 126 127 128 129 130 131 132 133 134 135 136 137 138 139 140 141 142 143 NextLast modified: May 25, 2011