Estate of Leon Spear, Deceased, Jeanette Spear, Harvey Spear and Robert Spear, Administrators, and Jeanette Spear - Page 17

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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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