- 28 -
he did so; his prior statements were an ineffectual but
unsurprising attempt to conceal petitioners' check cashing scheme
from respondent.
Cummings testified that he stole livestock from Reaves
Livestock with Lawson's help, sold the livestock, and split the
proceeds with Lawson. Petitioners contend that Cummings'
testimony shows that Lawson was likely to embezzle. We disagree.
Cummings' testimony is questionable because in 1991 he said that
Lawson was not involved in these thefts; he changed his story
shortly before the trial in this case. Whether or not Lawson
helped Cummings steal from petitioners, we are not convinced that
he embezzled the cash from the 282 checks for reasons given
above.
Petitioners contend that their conservative lifestyle and
their ability to live on their income shows that they did not
receive the proceeds from the 282 checks. Mr. Reaves testified
that he used cash in his business, but he provided no records
showing how much cash he used or how he used it. His vague
explanations do not persuade us that he used the proceeds of the
282 checks for business expenses. Petitioners failed to keep
records that were sufficient to enable respondent to determine
their tax liabilities. See sec. 6001; sec. 1.6001-1(a), Income
Tax Regs.
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