Joseph A. and Carol DelVecchio - Page 19




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                    7.  Conclusion                                                    
               Joseph methodically understated gross receipts and cost of             
          goods sold in order to conceal the amount of net profit that                
          Monterey earned; he did that 2 years in a row.  According to his            
          own testimony, which, in many respects, was incredible, he had              
          kept what amounted to a second set of books, the computer sheets,           
          which purportedly are missing.  Joseph had no explanation for why           
          he maintained two separate sets of books.  He moved funds from              
          Monterey’s bank account to his personal account.  That is the               
          clear evidence that convinces us that Joseph fraudulently                   
          intended to understate his income with respect to Monterey for              
          1987 and 1988.                                                              
               D.  Portion of Underpayments Attributable to Fraud                     
               Petitioners have failed to rebut the presumption that the              
          entire underpayments in tax for 1987 and 1988 are due to fraud.             
          See sec. 6653(b)(2).  We find accordingly.                                  
               E.  Additions to Tax For Fraud                                         
               We sustain respondent’s additions to tax for fraud against             
          Joseph under section 6653(b)(1)(A) and (B) for 1987 and under               
          section 6653(b)(1) for 1988.                                                
          III.  Addition to Tax for Negligence                                        
               Having found that the entire underpayments for 1987 and 1988           
          are attributable to fraud, and that Joseph is subject to                    
          additions to tax on account thereof, we need not address the                






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