Charles Jerome Posnanski - Page 11

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               The existence of fraud is a question of fact to be resolved            
          from the entire record.  See DiLeo v. Commissioner, 96 T.C. 858,            
          874 (1991), affd. 959 F.2d 16 (2d Cir. 1992).  Fraud may be                 
          proven by circumstantial evidence, and reasonable inferences may            
          be drawn from the relevant facts.  See Spies v. United States,              
          317 U.S. 492, 499 (1943); Stephenson v. Commissioner, 79 T.C.               
          995, 1006 (1982), affd. 748 F.2d 331 (6th Cir. 1984).  Any                  
          conduct, the likely effect of which would be to mislead or to               
          conceal, may establish an affirmative act of evasion.  See Spies            
          v.United States, supra at 499; Zell v. Commissioner, 763 F.2d               
          1139, 1145-1146 (10th Cir. 1985), affg. T.C. Memo. 1984-152.  A             
          pattern of consistent underreporting of income, particularly when           
          accompanied by other circumstances exhibiting an intent to                  
          conceal, justifies the inference of fraud.  See Parks v.                    
          Commissioner, supra at 664.                                                 
               Petitioner understated interest income and claimed false               
          deductions for mortgage interest payments, resulting in the                 
          consistent underreporting of income tax liabilities for 5 years.            
          Petitioner intentionally falsified computer records of the Bank             
          and misled respondent with respect to his correct income tax                
          liabilities.  Petitioner signed the returns for each year in                
          issue with full knowledge that he was underreporting his taxable            
          income.  As a result of his actions, petitioner was criminally              
          convicted for his underreporting activities, and petitioner                 

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