Betty June Dykstra and Pieter Dykstra - Page 8

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          evidence.  See Cheek v. United States, 498 U.S. 192, 202 (1991);            
          see also Niedringhaus v. Commissioner, 99 T.C. 202, 217 (1992).             
               Respondent has failed to carry the burden of proof.  Mrs.              
          Dykstra is not a savvy taxpayer or a sophisticated businesswoman.           
          She admittedly stole money and initially concealed her theft from           
          her employer.  Mrs. Dykstra's defrauding of her employer,                   
          however, does not automatically lead to the conclusion that she             
          intended to defraud the Federal Government.                                 
               There is no evidence that Mrs. Dykstra withheld information            
          from or attempted to mislead respondent during his investigation.           
          In fact, it appears that once Mrs. Dykstra was informed that                
          embezzled funds were taxable, she fully admitted to owing the               
          tax.  She did not maintain two sets of books or attempt to                  
          conceal assets.  At trial, she answered questions freely,                   
          honestly, and without evasion.  Mrs. Dykstra testified that she             
          did not know that embezzled income was taxable, and we found her            
          testimony credible.                                                         
               While it may be reasonable to conclude that an embezzler is            
          a type of individual who would understate her income on her                 
          return to avoid paying taxes, we are unable to find on the record           
          before us any clear and convincing evidence that Mrs. Dykstra               
          refrained from reporting income which she knew to be taxable.               
          We, therefore, conclude that Mrs. Dykstra is not liable for the             

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