David M. Leggett - Page 15

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          (1990); Recklitis v. Commissioner, supra at 910; Castillo v.                
          Commissioner, 84 T.C. 405, 409 (1985); Rowlee v. Commissioner,              
          supra at 1125.  In addition, the taxpayer's background and the              
          context of the events in question may be considered circumstan-             
          tial evidence of fraud.  See Plunkett v. Commissioner, 465 F.2d             
          299, 303 (7th Cir. 1972), affg. T.C. Memo. 1970-274; Niedringhaus           
          v. Commissioner, supra at 211.  Although no single factor is                
          necessarily sufficient to establish fraud, the existence of                 
          several indicia constitutes persuasive circumstantial evidence of           
          fraud.  See Bradford v. Commissioner, supra at 307; Petzoldt v.             
          Commissioner, supra at 700.                                                 
               The record in this case is replete with indicia of fraud by            
          petitioner.  Prior to the years at issue, petitioner had a                  
          history of filing returns and paying taxes.  He thus knew that he           
          was required to file returns and pay taxes.  Nonetheless, peti-             
          tioner willfully did not file a return or report income for any             
          of the years at issue, thereby establishing a pattern of sub-               
          stantial and consistent understatement of income.  We did not               
          find petitioner's explanations of his behavior to be credible.              
          On or about June 30, 1993, petitioner submitted to Biddle a false           
          Form W-8 in which he claimed not to be a U.S. citizen and to be             
          exempt from backup withholding rules.4  Except for estimated tax            

               4  Petitioner claims that Biddle hired petitioner as an                
          independent contractor and that therefore there was no with-                
          holding to be made by Biddle at the time in June 1993 when                  

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