Peter S. Pau and Susanna H. Pau - Page 19

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          persuasive evidence.  Solomon v. Commissioner, 732 F.2d 1459,               
          1461 (6th Cir. 1984), affg. per curiam T.C. Memo. 1982-603.  Some           
          conduct and evidence can be classified under more than one                  
          factor.  A taxpayer's intelligence, education, and tax expertise            
          are also relevant in determining fraudulent intent.  See                    
          Stephenson v. Commissioner, 79 T.C. 995, 1006 (1982), affd. 748             
          F.2d 331 (6th Cir. 1984); Iley v. Commissioner, 19 T.C. 631, 635            
               Applying the aforementioned criteria, as set out below, we             
          conclude that petitioners underreported their income for 1990               
          with the intention to evade income tax on $990,000 and are                  
          therefore liable for a penalty under section 6663.                          
               1.  Understatement of Income                                           
               Petitioners assert that they are not liable for the civil              
          fraud penalty because there is no "pattern of underreporting"               
          income.  Respondent acknowledges that the evidence does not                 
          demonstrate such a pattern.  Nevertheless, she contends that a              
          pattern of underreporting is not a sine qua non for the                     
          imposition of the civil fraud penalty.                                      
               We agree with respondent that she may assert such a penalty            
          where a taxpayer fails to report income, even for only 1 year,              
          with the intention of evading tax due on that income.  In                   
          Mitchell v. Commissioner, T.C. Memo. 1994-242, the Court examined           
          facts relating to a corporate taxpayer and an officer.  Acting              
          for the corporation, the officer sold its airplane and diverted             
          the sales proceeds to a Swiss bank account.  Neither the                    

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