Ella Freidus - Page 20

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               Petitioner's failure to file her returns for the years 1987,            
          1988, 1989, and 1990, establishes a 4-year pattern of substantial            
          and consistent understatements of income.                                    
               Petitioner's explanations for her failure to file tax                   
          returns and provide her accountants with complete and accurate               
          information are contradicted by the record.  Petitioner asserts              
          that her failure to file was caused by the subpoena issued to her            
          in the collection action against Mr. Freidus which interrupted               
          the process of gathering information to submit her returns.                  
          Therefore, petitioner maintains that her ultimate failure to file            
          was caused by the disruption attendant to the collection action              
          and not by an intent to defraud the government.                              
               We disagree.  The record indicates that petitioner began                
          producing documents in response to the subpoena on February 23,              
          1990.  Since her 1987 and 1988 returns were due prior to this                
          date, the subpoena could not have caused a disruption in                     
          preparation of these tax returns.  Furthermore, the parties have             
          stipulated that at no time was petitioner denied access to her               
          records and that petitioner had custody of all original                      
          documents.  Therefore, petitioner's failure to file her tax                  
          returns cannot be attributed to the collection action against Mr.            
          Freidus.  Petitioner's implausible explanation is a badge of                 

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