-26-
v. Sec. Pac. Natl. Bank, 48 Cal. Rptr. 2d 174, 185 (1995).
Although California has not expressly codified these “badges of
fraud”, the legislative history of its version of the UFTA
demonstrates that indicia of intent should be given consideration
in determining whether a taxpayer has acted with intent to
hinder, delay, or defraud a creditor. Annod Corp. v. Hamilton &
Samuels, 123 Cal. Rptr. 2d 924 (Cal. App. 2002). The record
before us establishes an actual intent to defraud creditors by
DDL through the actions of its sole officer, petitioner, and by
its office manager, Ms. Le. See Benes v. Commissioner, 42 T.C.
358, 383 (1964) (fraud of a sole or dominant shareholder can be
attributed to the corporation), affd. 355 F.2d 929 (6th Cir.
1966); Auerbach Shoe Co. v. Commissioner, 21 T.C. 191, 194 (1953)
(same), affd. 216 F.2d 693, 697-98 (1st Cir. 1954). DDL, through
the actions of these individuals, caused a substantial amount of
its corporate funds to be diverted to the Les in 1990 and 1991.
The Les attempted to conceal this diversion either by cashing the
corporate checks, by depositing them into their personal bank
accounts, or by converting them into cashier’s checks. As a
result of this diversion, DDL was left without sufficient assets
to pay its tax liabilities on the income connected to the
diverted funds.
We conclude that an actual intent to defraud the
Commissioner existed when the corporate receipts were diverted by
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