U.R. Neely - Page 13




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          returns to be accurate at the time he signed them.  He was not              
          aware that the payments to the workers should have been included            
          in the employment tax returns, and, in any event, he was not                
          specifically aware that the payments were not so included.                  
          Furthermore, petitioner did not know that the payments to the               
          workers had been coded for accounting purposes as distributions             
          to himself.  Petitioner’s testimony in this regard was highly               
          credible, and we note that it was corroborated by the testimony             
          of his former office manager and his outside accountant.                    
               Ms. Gerber stated that she had no problems with Mr. Neely in           
          terms of his honesty with her and that he never asked her to do             
          anything that made her uncomfortable in terms of her job                    
          responsibilities and duties.  Similarly, Mr. Messmer testified              
          that he at no time had reservations as to petitioner’s                      
          forthrightness and honesty in terms of producing the documents              
          and information necessary for him to prepare full and accurate              
          tax returns.  Even the revenue agent who conducted the                      
          examination of petitioner’s income tax return conceded that                 
          petitioner cooperated with her in every aspect requested and                
          provided her with all pertinent records and documents.  These               
          witnesses do not paint petitioner as one out to deprive the                 
          Commissioner of his rightful tax revenue.                                   
               The only potential “badge of fraud” in this case is                    
          petitioner’s agreement to pay the workers in cash.  The cash                
          arrangement, however, was not part of a scheme on the part of               




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