- 17 -
that Mr. Parsons testified that, as pharmacist, he did not
operate the cash register at Cedar Hill; this task was performed
by other employees. Thus, Mr. Parsons could not have readily
avoided ringing up cash sales without involving his employees in
this scheme.
In summary, we find that in removing cash from Cedar Hill’s
proceeds and failing to record or report such removal to their
accountant, petitioners engaged in “conduct * * * likely * * * to
mislead or to conceal.” Spies v. United States, 317 U.S. at 499.
The amounts petitioners diverted to personal use that were not
reported on their returns for 2 years in a row were substantial
in relation to their reported income, rebutting inferences of
mere mistake or inadvertence. The explanations offered by
petitioners to cast these events in a more innocent light are
implausible and unpersuasive. Moreover, petitioners were both
convicted of violations of section 7206(1) for filing returns for
each year in issue reporting an amount of income which they knew
to be false. While the convictions under section 7206(1) do not
estop petitioners from denying fraud for these years, they are
evidence of fraud. Absent some credible evidence that knowingly
filing a false return should not be considered indicative of
fraud, a section 7206(1) conviction is highly persuasive of
fraud. See Biaggi v. Commissioner, T.C. Memo. 2000-48; Wilson v.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011