- 33 -
v. Commissioner, 796 F.2d 303, 307-308 (9th Cir. 1986), affg.
T.C. Memo. 1984-601; DiLeo v. Commissioner, supra at 875; Parks
v. Commissioner, supra at 664-665; Bacon v. Commissioner, supra.
A corporation acts only through its officers, and it does
not escape responsibility for its officers’ actions while serving
in their corporate capacity. DiLeo v. Commissioner, supra;
Federbush v. Commissioner, 34 T.C. 740, 749 (1960), affd. 325
F.2d 1 (2d Cir. 1963); Gold Bar, Inc. v. Commissioner, T.C. Memo.
2000-211. Fraudulent intent by a corporation “necessarily
depends upon the fraudulent intent of the corporate officer.”
Federbush v. Commissioner, supra. Also, “fraud of a sole or
dominant shareholder can be attributed to the corporation.” Gold
Bar, Inc. v. Commissioner, supra. In determining whether Sam
Kong Fashions and Mr. Kong acted with fraudulent intent, we
examine the conduct of Mr. Kong, who was the corporation’s
president and dominant shareholder.
1. Understatement of Income
Petitioners substantially understated their incomes in 1994
and 1995. “A pattern of consistent underreporting of income,
especially when accompanied by other circumstances showing an
intent to conceal, justifies the inference of fraud.” Parks v.
Commissioner, supra at 664 (citing Holland v. United States, 348
U.S. 121, 137 (1954); Otsuki v. Commissioner, supra at 105-106).
Page: Previous 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 NextLast modified: May 25, 2011