- 19 - Clayton v. Commissioner, supra at 647. Direct evidence of the requisite fraudulent intent is seldom available, but fraud may be proved by examining circumstantial evidence indicative of the taxpayer's motives. Recklitis v. Commissioner, 91 T.C. 874, 910 (1988). Over the years, courts have developed various factors, or "badges", which tend to establish the existence of fraud. See Clayton v. Commissioner, supra at 647. Respondent relies primarily on the allegations of Mr. Rabassa, who claims that Mrs. Daniel asked him to fabricate deductions on her 1992 return. At trial, we had the opportunity to observe Mr. Rabassa's demeanor and find his testimony to be completely discreditable. Mr. Rabassa's motivation for making such false accusations apparently stems from his inability to adjust to his lower entry level position with the IRS after occupying a high level management position in the banking industry. Moreover, we are unpersuaded by respondent's attempt to bootstrap the disputed accusations of Mrs. Daniel's disgruntled, subordinate worker into a broad assertion of fraud against an employee who is acknowledged to have a reputation for honesty and fairness, as testified to by her co-worker Martha Brookes. We find that Mrs. Daniel's reliance upon Mr. Rabassa's advice was certainly an error in her judgment, but does not support a finding of fraudulent intent to evade tax believed to be due and owing.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011