Terrell Equipment Company, Inc., et al. - Page 13

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          indicate the presence of fraud.                                             
          Stipulations Related to the Badges of Fraud                                 
               The parties stipulated facts that expressly state or support           
          the conclusion that most of the traditional badges of fraud do              
          not exist in these cases.  These stipulations included that                 
          petitioners did not:  Maintain inadequate records, make                     
          implausible or inconsistent explanations, conceal assets, fail to           
          cooperate with tax authorities, engage in illegal activities,               
          intend to mislead, fail to file tax returns, or deal in cash.               
          The trial testimony further leads us to conclude that none of the           
          aforementioned badges of fraud are present in this case.                    
               1. Profit Sharing Plan                                                 
               Respondent claims that petitioners’ transactions with TECO’s           
          profit sharing plan were fraudulent.  RA Craddock had a B.B.A. in           
          general business and accounting and an M.B.A.  Even with his                
          experience as an auditor, his advanced degrees, and far more tax            
          expertise than petitioners, he needed help from an expert on                
          profit sharing plans about various highly technical issues                  
          regarding TECO’s profit sharing plan.  Vernon and Janet had no              
          tax background or expertise.  We do not believe that they had a             
          level of tax knowledge or sophistication such that they intended            
          or attempted to evade taxes via the profit sharing plan.                    
               2. Alleged Misleading of RA Craddock                                   
               Respondent claims that Vernon misled RA Craddock by                    
          providing RA Craddock with false or incomplete information.  We             

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