Donald R. Cooley and Cathy A. Cooley - Page 20

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         Cir. 1993); Hughes v. Commissioner, T.C. Memo. 1994-139 (citing              
         Rogers v. Commissioner, 111 F.2d 987, 989 (6th Cir. 1940), affg.             
         38 B.T.A. 16 (1938)).  It has been held that discrepancies of 100            
         percent or more between the correct net income and the reported              
         net income for 3 successive years provide strong evidence of                 
         fraudulent intent.  Hargis v. Godwin, 221 F.2d 486, 490 (8th Cir.            
         1955); see Rogers v. Commissioner, supra at 989; see also                    
         Williams v. Commissioner, supra; Adams v. Commissioner, T.C.                 
         Memo. 1979-305.  Moreover, fraudulent understatement of income               
         may be established by overstatement of Schedule C expenses.                  
         Drobny v. Commissioner, 86 T.C. 1326, 1349 (1986); see Clark v.              
         Commissioner, T.C. Memo. 1991-313; see also Buchbinder v.                    
         Commissioner, T.C. Memo. 1986-485.                                           
               Petitioners originally reported petitioner’s taxable income            
         for his 1989, 1990, 1991, 1992, and 1993 taxable years,                      
         respectively as $87,508.67, $77,398.10, $49,747.09, $62,042.31,              
         and $80,189.01.  On their final amended returns for petitioners’             
         1989, 1990, 1991, 1992, and 1993 taxable years, respectively,                
         petitioners reported petitioner’s taxable income as $186,846.86,             
         $197,600.86, $114,947.98, $162,232.18, and $150,708.73.                      
         Petitioners’ returns understated petitioner’s taxable income for             
         his 1989, 1990, 1991, 1992, and 1993 taxable years, respectively,            
         by $99,338.19, $120,202.76, $65,200.89, $100,189.87, and                     
         $70,519.72.  The discrepancies for the years in issue were 114               






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