- 46 - 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.”).Page: Previous 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 Next
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