Thomas Rice - Page 15

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          at issue:  (1) Understatement of income; (2) failure to keep                   
          adequate books and records; (3) failure to file tax returns; (4)               
          acts designed to conceal income and/or assets; (5) false,                      
          misleading, inconsistent, or implausible explanations of                       
          behavior; (6) failure to cooperate with respondent’s agents; (7)               
          engaging in illegal activities; (8) awareness of tax laws; (9)                 
          attempts to conceal illegal activities; (10) high education level              
          and sophistication; and (11) a pattern of inaction and delay                   
          during the pretrial and trial proceedings.                                     
               We agree that petitioner’s deemed admissions contain several              
          badges of fraud.  Petitioner knew of the requirement to file tax               
          returns.  Nevertheless, petitioner consistently failed to report               
          substantial amounts of income over several years, behavior which               
          strongly evidences fraudulent intent.  See Farber v.                           
          Commissioner, 43 T.C. 407, 419-420 (1965).  Petitioner also knew               
          of the requirement to maintain adequate books or records of                    
          account but failed to do so.  This record-keeping omission,                    
          combined with petitioner’s failure to file tax returns,                        
          constitutes persuasive evidence of petitioner’s intent to conceal              
          income and evade taxes.  Petzoldt v. Commissioner, supra at 701.               
               Other badges of fraud contained in petitioner’s deemed                    
          admissions include petitioner’s involvement in illegal                         
          activities, as evidenced by petitioner’s criminal convictions and              
          practice of opening bank accounts under false names, addresses,                






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