- 34 -
In 1994 and 1995, petitioners understated their incomes by
substantial amounts.
2. Implausible or Inconsistent Explanations of
Behavior
Petitioners also offered implausible explanations for
failing to deposit customer checks into the checking account of
Sam Kong Fashions. Petitioners assert that the contractors
issued the checks payable to Mr. Kong because he provided
services to the contractors. Yet, representatives of Style
Setters and Half Moon Bay testified that the checks in the record
were issued to Sam Kong Fashions, not Mr. Kong. Furthermore, Mr.
Kong acted inconsistently with this explanation because he listed
wages from Sam Kong Fashions as his only source of income on his
1994 and 1995 income tax returns.
Petitioners’ explanations are also inconsistent with how Sam
Kong Fashions processed customer checks. Sam Kong Fashions
deposited numerous checks payable to “Sam Kong” into its business
checking account. Nothing on the face of these checks explains
why some checks issued to Mr. Kong were deposited into Sam Kong
Fashions’s business account while others were deposited into Mr.
Kong’s personal checking account. Similarly, several checks
issued to Sam Kong Fashions were deposited into Mr. Kong’s
personal account. From the inconsistent treatment of customer
checks, we infer that petitioners attempted to hide the receipt
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