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Las Vegas exceeded the costs of Mr. Beck's travel expenses.
Therefore, he reasoned that it was proper for the corporation to
pay for the expenses and deduct the expenses on its returns.
Although Mr. Beck was wrong about the propriety of paying
those expenses with corporate funds and deducting the expenses on
the corporate return, we do not think that the error was a result
of fraudulent intent to evade tax.
Furthermore, Beck's Liquors underreported its cost of goods
sold by $39,004 on its 1992 return. A taxpayer intending to
fraudulently evade tax would not understate the cost of goods
sold, particularly by such a substantial amount.
2. Failure To File a Tax Return
In the instant cases, Mr. Beck's failure to file returns for
1992 and 1993 is consistent with his belief that his gross income
was less than the minimum amount that required the filing of a
return. Mr. Beck's failure to file does not, therefore, convince
us that such failure was due to fraud. Dajos v. Commissioner,
T.C. Memo. 1986-330.
3. Concealment of Bank Accounts From Internal Revenue
Agent, Failure To Furnish the Government With Access To His
Records, and Failure To Cooperate With Tax Authorities
There is no evidence of concealment or attempts to mislead
respondent’s agents. Mr. Beck was cooperative and forthright
throughout respondent’s investigation. There is no evidence of
any falsification or alteration of books and records. Mr. Beck
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