Franklin W. Briggs - Page 45




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         evidence of fraud with regard to these items.  See Korecky v.                
         Commissioner, supra at 1568.                                                 
              When petitioners met with their accountants to review their             
         tax returns for the years in issue, they did not mention the gas             
         rebate income even though they were asked whether any items of               
         income had been omitted.32                                                   
              Petitioners cashed the rebate checks, deposited them into               
         their personal bank accounts, or, in one instance, deposited the             
         check in Towers Construction’s bank account before dividing the              
         proceeds between Briggs and Mrs. Morris.  Petitioners’                       
         explanations of their behavior in this regard were implausible               
         and inconsistent.                                                            
              Petitioners kept inadequate records.  By Briggs’ own                    
         admission, petitioners were “sorry bookkeepers”.  Daniell’s                  
         accountant testified that the records were “appalling”.  The                 
         funds of petitioners’ various business entities, and possibly                
         their personal funds as well, were commingled in something called            
         an “intercompany” bank account that apparently was in the name of            
         Briggs.33  Petitioners disregarded corporate formalities in their            

               32 Briggs testified implausibly that he informed his                   
          accountants of the gas rebate payments “indirectly” by giving               
          them a copy of a newspaper article concerning the rebate program.           
          “I gave them a copy of it.  And I laughed and joked and said,               
          Here you go.  Look at this.”                                                
               33 Briggs testified on direct examination that “I didn’t               
          have a personal account.  My account was commingled with the                
                                                             (continued...)           





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