Roy G. and Dorothy M. Welker - Page 13

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          explain how this information would have gotten Bob Brockland in              
          trouble.  Furthermore, Bob Brockland did not consider the cash               
          payments to Mr. Welker to be gifts from Brockland Pontiac;                   
          instead, he thought they were fees which were a cost of doing                
               Mr. Welker also implied that he did not need to be wholly               
          forthright or honest in his meetings with the agents because he              
          "wasn't on a stand or on trial."                                             
               Additionally, a conviction under section 7206(1) may render             
          a taxpayer's credibility suspect.  See Piazza v. Commissioner,               
          T.C. Memo. 1985-222; see also Fed. R. Evid. 609(a).  Mr. Welker              
          pleaded guilty to, and was found guilty of, willfully filing                 
          false income tax returns in violation of section 7206(1) for 1984            
          and 1986.                                                                    
               All these facts, when taken together, are evidence of fraud.            
                    6.   Filing False Documents (The Criminal Tax                      
               Although not dispositive, Mr. Welker's convictions under                
          section 7206(1) are probative evidence that he intended to evade             
          taxes.  See Wright v. Commissioner, 84 T.C. 636, 643-644 (1985).             
                    7.   Dealing in Cash                                               
               The exclusive use of cash when conducting business                      
          transactions, when coupled with a lack of recordkeeping, is                  
          evidence of fraud.  McGirl v. Commissioner, T.C. Memo. 1996-313;             
          see also Nicholas v. Commissioner, 70 T.C. 1057, 1066 (1978)                 
          (dealing extensively in cash increases the relevance of                      

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