Brendt L. Smith - Page 14

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          Controls, Inc., in 1996 in time to include the amount on his                
          return is implausible, given that the return was not filed until            
          October 21, 1996, and Johnson Controls, Inc., had a statutory               
          obligation to mail the form to him by the end of the preceding              
          January.10                                                                  
               Petitioner’s attempts to identify nontaxable sources of                
          income are similarly implausible.  His claim that his mother gave           
          him $10,000 was not substantiated.  His claim that he deposited             
          rent receipts belonging to his mother into his own checking                 
          account, and then paid over the receipts to his mother, was later           
          qualified when the examining agent was unable to trace these                
          amounts through his account.  In the qualified version,                     
          petitioner claimed that the rent receipts were sometimes expended           
          on repairs and sometimes kept by him for a period of time before            
          being repaid to his mother.  Even if the claims regarding the               
          rent receipts were accepted, they would at most account for                 
          $11,700 of nontaxable source income annually, far less than the             
          amounts petitioner failed to report in each year.                           
               In reaching our conclusion that petitioner’s various                   
          attempts to explain to the examining agent his failure to report            
          income constitute evidence of fraud, we also take note of the               


               10 Information returns must be delivered to the person with            
          respect to whom the information is required by Jan. 31 of the               
          year following the calendar year in which payment of the reported           
          income is made.  See sec. 6041(d).                                          





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