-29-
Petitioners' explanations are improbable, in view of the sequence
of events, and were contradicted by disinterested witnesses.
Implausible explanations of this kind are among identified badges
of fraud. See Bradford v. Commissioner, supra.
We have also found that petitioner intentionally
underreported income from sale of the Malloy property by $65,269
in order to defeat or avoid the payment of taxes known to be
owing on that gain. From his testimony and from the entire
record, we are satisfied that petitioner had the education and
intelligence to understand what was required and that he
deliberately falsified his return in order to avoid payment of
tax known to be owing. Although we do not believe her trial
testimony, we have no evidence that Mrs. Goldberg had the
education or experience to know that these transactions were
falsely reported. The addition to tax for fraud for 1988 will be
sustained only as to petitioner. See Minter v. Commissioner,
T.C. Memo. 1991-448; Congelliere v. Commissioner, T.C. Memo.
1990-265.
Our conclusions as to the above two items for 1988 are
sufficient to establish an underpayment of tax for that year and
to shift to petitioner the burden of showing that any other
portion of an underpayment is not due to fraud. Respondent has,
however, conceded that certain disallowed expenses do not result
in an underpayment due to fraud, and those concessions will
affect the final computation.
Page: Previous 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 NextLast modified: May 25, 2011