Terrell Equipment Company, Inc., et al. - Page 11

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          Petitioners’ Sophistication                                                 
               The sophistication, education, and intelligence of the                 
          taxpayer are relevant to determining fraudulent intent.                     
          Niedringhaus v. Commissioner, 99 T.C. 202, 211 (1992); Stephenson           
          v. Commissioner, supra at 1006; Iley v. Commissioner, 19 T.C.               
          631, 635 (1952).  There is no evidence suggesting that Vernon or            
          Janet had any training in accounting, tax planning, or tax return           
          preparation.  They both have a high school education, and Vernon            
          attended only one semester of junior college.                               
          Petitioners’ Credibility                                                    
               Respondent repeatedly claims that petitioners’ contentions             
          are merely supported by their self-serving testimony.  We                   
          disagree.  Several witnesses corroborated Vernon and Janet’s                
          testimony.  This included establishing:  (1) TECO’s bookkeepers             
          coded TECO’s checks, and when the bookkeepers were uncertain                
          about how to code a check, they let Mr. Allison code the checks;            
          (2) TECO checks were paid to Vernon so he could purchase business           
          items for TECO in cash in order to get better prices; (3) Vernon            
          conducted TECO business outside the office, including at home and           
          in a separate structure (home office) located on the same                   
          property as Vernon and Janet’s residence during the years in                
          issue; (4) trips to Las Vegas, Nevada, were business related; (5)           
          hunting trips were business related; (6) a country club                     
          membership was used for business related events; (7) a tractor              
          was used at TECO for business purposes; and (8) Vernon was very             

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