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1. Implausible or Inconsistent Explanations of Behavior
In finding that petitioner’s explanations were implausible
or inconsistent, we stated that petitioner’s testimony about the
cash hoard was not believable. Estate of Spear v. Commissioner,
T.C. Memo. 1993-213 (slip op. at 59). The Court of Appeals
found her testimony to be quite straightforward and to appear to
be credible, Estate of Spear v. Commissioner, 41 F.3d at 11, and
we have modified our earlier findings to what we believe is an
appropriate extent based on her testimony, especially relating to
petitioners’ dealing in cash before 1974. We conclude that this
badge of fraud is no longer present.
2. Large Understatements of Income
The discrepancies between petitioners' actual net income and
the income they reported is reduced to the extent of their cash
on hand on December 31, 1974. This badge of fraud is less
compelling than before.
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