- 23 -
caused tax returns for the Elknur Family Limited Partnership to
be filed for each year 1994 through 2003. Respondent contends,
and we are persuaded, that petitioners’ pattern of failing to
file when viewed in light of their history of filing timely
income tax returns for themselves and for others is evidence of
petitioners’ fraudulent intent to evade tax liability.
2. Understating Income
Moreover, consistent failure to report substantial amounts
of income over a number of years is, standing alone, highly
persuasive evidence of fraudulent intent. See Kurnick v.
Commissioner, 232 F.2d 678 (6th Cir. 1956), affg. T.C. Memo.
1955-31; Temple v. Commissioner, T.C. Memo. 2000-337, affd. 62
Fed. Appx. 605 (6th Cir. 2003). Here, by petitioners’ own
concessions at the time of trial, Mr. Runkle had adjusted gross
income8 of $89,913 for 1991, $62,223 for 1993, $50,313 for 1993,
$38,661 for 1994, and $38,211 for 1995 and Mrs. Runkle had
adjusted gross income of $33,851 for 1991, $24,936 for 1992,
$26,452 for 1993, $55,383 for 1994, and $27,024 for 1995.
Respondent argues, and we agree, that this failure to report such
substantial income is evidence of fraud.
8The adjusted gross income amount is subject to Mr. Runkle’s
claim that he is entitled to business expenses in excess of those
allowed by respondent in the deficiency notice, infra.
Page: Previous 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 NextLast modified: May 25, 2011