Skirvin G. Johnson - Page 12




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          cashier's check to Johnson McGee were deposited in the Johnson              
          McGee account at Petra, an account that petitioner admittedly               
          owned and controlled.  He also admitted to using a portion of               
          those funds to repay the Cortez loan, a loan he admitted                    
          illegally procuring in 1988.                                                
               There is no evidence of a consensual recognition by                    
          petitioner and the City of Austin, express or implied, that                 
          petitioner was obligated to repay the $94,343.16.  See James v.             
          United States, supra at 219.  In addition, petitioner possessed             
          unrestricted control over the disposition of those funds and                
          earned $698.23 in interest from the Johnson McGee account.  See             
          Rutkin v. United States, 343 U.S. 130, 137 (1952) (stating that             
          holder has such control over it when he has the "freedom to                 
          dispose of it at will").  He failed, however, to report on his              
          1989 Federal income tax return any amount related to Johnson                
          McGee.  The underreporting of income resulted in an underpayment            
          of tax because there is no suggestion of offsetting deductions in           
          this case.  The amounts repaid by petitioner have been conceded             
          by respondent as not includable in income.  Cf. United States v.            
          Rosenthal, 470 F.2d 837, 842 (2d Cir. 1972) (repayments did not             
          negate fraud but were designed to keep scheme afloat).                      
               Fraudulent intent may be inferred from various kinds of                
          circumstantial evidence or "badges of fraud", including an                  
          understatement of income, inadequate records, implausible or                





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