- 13 - iii. Culpable Spouse’s Evasiveness and Deceit Mr. McClelland testified that he was responsible for the improper interest paid deduction, which ultimately led to the deficiency in petitioner’s 1997 tax liability. Even though Mr. McClelland knew the claimed interest payment was never going to be made, he entered it into Red Wing’s check registry since Mr. Kramer used that information to complete Red Wing’s Federal income tax return. This is how the incorrect interest payment in Red Wing’s check registry was reported on Red Wing’s tax return for its fiscal tax year ended October 31, 1997. These circumstances support a conclusion that Mr. McClelland was the evasive and deceptive taxpayer in this case. This conclusion is further bolstered by Ms. McClelland’s credible testimony that Mr. McClelland did not want her to have access to financial information. Mr. McClelland’s control over Red Wing’s and petitioners’ financial affairs allowed Red Wing, through Mr. McClelland’s actions, to report the improper interest paid deduction on its tax return. Mr. McClelland argues that, as Red Wing’s secretary, Ms. McClelland could be expected to be familiar with the various corporate resolutions and documents submitted into evidence at trial. However, Ms. McClelland’s credible testimony that Mr. McClelland never explained to her the numerous documents he requested her to sign, nor provided her the opportunity to reviewPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Next
Last modified: May 25, 2011