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3. Failure To File a Tax Return
Failing to file tax returns is indicative of fraudulent
intent. Bradford v. Commissioner, supra. Although petitioners
did file a 1986 tax return, the mere filing of that return does
not necessarily weigh in favor of petitioners. Where, as here,
the return was admittedly filed with an understatement of income
and requested a full refund of the $38,000 paid in estimated
taxes, this factor weighs against petitioners.
4. Implausible or Inconsistent Explanations of Behavior
Giving implausible or inconsistent explanations of behavior
is indicative of fraud. Id. Mr. Ford testified before this
Court that the Canadian accounts held money owned by Mr. Doorn.
The record, however, shows that Mr. Ford controlled the accounts
in question and repeatedly received financial benefit from them,
by his own admission taking up to $1 million in 1986. This sum
was never repaid, and there was never an accounting between
petitioners and Mr. Doorn. The Court finds his explanation
implausible, because the evidence establishes petitioners’
ownership and control of the Canadian money.
Ms. Ford claimed that she did not even notice petitioners’
negative income on their tax return when she signed it. This is
not credible given her expenditures in 1986: she wrote over
$600,000 in checks to cash, purchased a $1.15 million home,
purchased a Rolls-Royce automobile, and purchased $17,000 in
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