Domer L. Ishler - Page 27

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               4.   Badges of Fraud                                                   
                    a.   Fraud as to Petitioner                                       
               Courts have developed several objective indicators, or                 
          “badges”, of fraud.  Recklitis v. Commissioner, 91 T.C. 874, 910            
          (1988).  Several indicia that petitioner knew that he was taxable           
          on at least some of the funds he diverted from TCM are present in           
          this case.                                                                  
               Concealing income from one’s return preparer can be evidence           
          of fraud.  Korecky v. Commissioner, 781 F.2d 1566, 1569 (11th               
          Cir. 1986), affg. T.C. Memo. 1985-63; Farber v. Commissioner, 43            
          T.C. 407, 420 (1965), modified 44 T.C. 408 (1965).  Petitioner              
          did not give White records of any Camaro accounts or tell White             
          that he used Camaro funds for personal purposes or that he had              
          Camaro make payments to his family and friends.  Petitioner did             
          not tell White that he received the NSA checks in Huntsville and            
          sent them to Hong Kong.                                                     
               Petitioners contend that petitioner did not have signature             
          authority over Camaro’s bank accounts in 1987 and 1988 because              
          Camaro’s board of directors revoked petitioner’s signature                  
          authority over Camaro’s SCB accounts by resolution dated December           
          13, 1983.                                                                   
               Respondent contends that SCB did not receive Camaro’s                  
          revocation of petitioner’s signature authority.  Petitioners                
          maintain that respondent has not proven that SCB did not receive            

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