- 11 -
Indicia of fraud include: (1) Understatements of income;
(2) inadequate books and records; (3) implausible or inconsistent
explanations of behavior; and (4) lack of cooperation with tax
authorities. See Bradford v. Commissioner, 796 F.2d 303, 307-308
(9th Cir. 1986), affg. T.C. Memo. 1984-601; Clayton v.
Commissioner, 102 T.C. 632, 647 (1994); Petzoldt v. Commissioner,
92 T.C. 661, 699-700 (1989); Recklitis v. Commissioner, 91 T.C.
874, 910 (1988).
Petitioners have not alleged any nontaxable sources of income,
and the roofing business constitutes the likely taxable source of
the deposits into the checking account.
With regard to fraudulent intent, the evidence establishes for
each year in issue that petitioners realized significant income
that they failed to report, that petitioners failed to provide to
respondent’s agents books and records relating to the roofing
business, that petitioners failed to pay significant tax
liabilities that they owed, that petitioners did not cooperate with
respondent, and that petitioners made erroneous tax protester
objections to the tax laws. Respondent has proven by clear and
convincing evidence petitioners’ fraud in regard to their Federal
income taxes. We conclude that all of the taxable income charged
to petitioners herein is attributable to fraud.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 Next
Last modified: May 25, 2011