Franklin W. Briggs - Page 46




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         joint venture business operations and used what they referred to             
         as a “funnel method” of accounting, whereby they commingled and              
         directed funds to various entities, making it difficult for even             
         their accountants to associate transactions with specific                    
         entities.                                                                    
              It is also significant that Briggs and Mr. Morris were                  
         convicted pursuant to section 7207 for filing false Federal                  
         income tax returns for the years in issue.34  These convictions              
         establish that Briggs and Mr. Morris willfully filed false                   
         documents and provide circumstantial evidence of their intention             
         to evade taxes with regard to the gas rebate payments.  See                  
         Wright v. Commissioner, 84 T.C. 636 (1985); Pariseau v.                      
         Commissioner, T.C. Memo. 1985-124.  Although Mrs. Morris was not             
         convicted, she cashed a number of the rebate checks, as indicated            
         in the appendix, which we view as evidence that she committed                
         fraud along with her husband.                                                




              33(...continued)                                                        
          company account in there.”  On cross-examination, Briggs admitted           
          that he also had a personal account.                                        
               34 Respondent does not contend, and we do not conclude, that           
          these convictions under sec. 7207 collaterally estop petitioners            
          from asserting a defense to the fraud penalty.  Cf. Sansone v.              
          United States, 380 U.S. 343, 352 (1965) (“Section 7207 requires             
          the willful filing of a document known to be false or fraudulent            
          in any material manner.  * * * Section 7207 does not require,               
          however, that the act be done as an attempt to evade or defeat              
          taxes.”).                                                                   





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