- 35 -
1998, Mr. Sowards failed to disclose the existence of the WPA
bank account. In a February 23, 1999, telephone interview, Mr.
Sowards stated that he knew very little about WPA. When
respondent’s employee indicated that he had information linking
Mr. Sowards with STL, Mr. Sowards stated that WPA was set up for
the retirement of Mr. Strong, and the funds transferred were
loans.33 Mr. Sowards indicated that there was no written
contract between himself and Mr. Strong. However, at the August
10, 1999, interview with the Revenue Agent, Mr. Sowards produced
for the first time the alleged loan document.
Mr. Sowards falsely represented that his wife had an
organizational consulting business. He maintained this
representation throughout this litigation until trial when he
admitted that he had fabricated this business. See DiLeo v.
Commissioner, 96 T.C. at 874 (“The taxpayer’s entire course of
conduct can be indicative of fraud.”).
We find all the above to be clear and convincing evidence
that Mr. Sowards fraudulently understated his tax for 1996 and
1997.34
33Mr. Sowards purported to have assigned beneficial
interests in WPA to his wife and family, not to Mr. Strong.
34Since we sustain respondent’s fraud penalties,
respondent’s alternative accuracy-related penalty pursuant to
sec. 6662 is moot. On brief, Mr. Sowards conceded additions to
tax under sec. 6654.
Page: Previous 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 NextLast modified: May 25, 2011