Compact Equipment Company - Page 19

                                       - 19 -                                         
          Instead, Dunkin, under Atkinson’s authority, established an                 
          accounts receivable due from Atkinson for the $69,000 payment.              
          The evidence in the record shows that petitioner did not intend             
          for the construction expenses to be compensation for services               
          rendered; thus, we find that the construction expenses constitute           
          nondeductible constructive dividends and that petitioner                    
          underpaid its taxes.                                                        
                    2.  Fraudulent Intent                                             
               Along with proving an underpayment, the Commissioner must              
          show that the taxpayer intended to evade taxes known to be owing            
          by conduct intended to conceal, mislead, or otherwise prevent the           
          collection of taxes.  See Powell v. Granquist, 252 F.2d 56, 60-61           
          (9th Cir. 1958); Rowlee v. Commissioner, 80 T.C. 1111, 1123                 
          (1983).  A corporation has no intent separate from those who                
          control it.  See King’s Ct. Mobile Home Park v. Commissioner,               
          supra at 516.  The existence of fraudulent intent by a                      
          corporation, therefore, is determined by the acts of its                    
          officers.  See id.                                                          
               Fraud is not to be presumed.  See Toussaint v. Commissioner,           
          743 F.2d 309, 312 (5th Cir. 1984), affg. T.C. Memo. 1984-25;                
          Rowlee v. Commissioner, supra at 1123.  The existence of fraud is           
          a factual question to be determined from all the facts and                  
          circumstances contained in the record.  See id.  Since direct               
          proof of intent is rarely available, fraud may be proved by                 

Page:  Previous  9  10  11  12  13  14  15  16  17  18  19  20  21  22  23  24  25  26  27  28  Next

Last modified: May 25, 2011