Roy G. and Dorothy M. Welker - Page 12

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          1989, when he told them he had received no gifts.  Since Mr.                 
          Welker knew that he should have reported the cash payments from              
          Brockland Pontiac as income when he prepared his returns, he                 
          misled Ms. Alexander and Mr. Neighbors on June 9, 1989, when he              
          told them that the cash payments were gifts.  All of this is                 
          evidence of fraud.                                                           
                    5.   Lack of Credibility of Mr. Welker's Testimony                 
               A taxpayer's lack of credibility, inconsistent testimony, or            
          evasiveness are factors in considering the fraud issue.                      
          Toussaint v. Commissioner, 743 F.2d 309, 312 (5th Cir. 1984),                
          affg. T.C. Memo. 1984-25.                                                    
               Mr. Welker claims that he asked Mr. Breslin about who pays              
          the tax on gifts.  It is questionable, however, whether Mr.                  
          Welker ever discussed the tax treatment of gifts with Mr.                    
          Breslin.  Mr. Breslin had no recollection of such a conversation;            
          however, he specifically remembered discussing how to handle a               
          dividend exclusion, report a gain on the sale of stock, and                  
          report income that was not evidenced by a Form 1099 with Mr.                 
               At trial, Mr. Welker claimed that he originally told Ms.                
          Alexander that he did not receive any gifts because he didn't                
          want to get Bob Brockland in trouble.  Mr. Welker could not                  

               5  Even if Mr. Welker and Mr. Breslin had this discussion,              
          Mr. Welker never informed Mr. Breslin about the circumstances                
          surrounding the receipt of the cash payments from Brockland                  

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