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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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