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shareholder, we are not convinced that he fully understood that
SCC’s corporate form required a separate tax return. In fact,
Mr. Strong formed SCC as a corporation because his attorney
recommended it. It has not been shown that Mr. Strong had any
expertise in keeping corporate books and records, or that his
attorney or accountants instructed him in filing corporate
returns. As a result, respondent has not shown by clear and
convincing evidence that Mr. Strong’s fraudulent intent extended
beyond his desire to conceal income with respect to his personal
income tax returns or that SCC’s failure to file tax returns was
fraudulent.
However, it is clear from the record that SCC did not file
Federal income tax returns for 1990-94 without any reasonable
explanation. Therefore, SCC is liable for the addition to tax
under section 6651(a)(1) for failure to file returns.
To reflect the foregoing and concessions by the parties,
Decisions will be entered
under Rule 155.
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