- 53 -
petitioner has shown by a preponderance of the evidence that
certain items were not fraudulent is necessary. We found above
that many of the adjustments respondent made were appropriate
because petitioner failed to present enough evidence to the
contrary to meet his burden of proof. However, we believe that
petitioner has shown by a preponderance of the evidence that the
remaining adjustments were not the result of fraud. Petitioner
was negligent in his failure to provide documentation of certain
loans from Taxman and WFIC and his failure to properly document
the transfer of his sole proprietorship to Taxman, but he did not
intend to evade tax on these items. While petitioner’s attempts
to conceal his use of at least $3,000 of Taxman’s cash receipts
each year indicates fraudulent intent, the other adjustments do
not rise to the level of fraud. Petitioner, albeit incorrectly,
reported gain from the sale of Lone Tree Manor on WFIC’s
corporate return. He also had plausible explanations for each
item of other income identified by respondent, although he did
not produce supporting documentation. Petitioner did show that
WFIC and Taxman kept corporate records, and the record includes
various loan schedules and corporate tax returns. A review of
the record shows that petitioner’s actions with respect to the
other items respondent adjusted were the result of negligence,
but the records petitioner did maintain and the separate
corporate accounts refute a fraudulent intent for the other
Page: Previous 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 NextLast modified: May 25, 2011