Harvey L. Hoover - Page 34

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               Petitioner maintained inadequate business records.  As                 
          stated in the criminal proceeding, petitioner “did not keep many            
          business records; according to his sons, he merely kept track of            
          ‘some things’ by handwritten notes on scraps of paper.”  United             
          States v. Hoover, 175 F.3d at 566.  We find that petitioner’s               
          failure to maintain adequate business records supports a finding            
          of fraud.                                                                   
               Petitioner devised a scheme to conceal his income and divert           
          it to his children with the intent of avoiding income taxes.                
          Petitioner instructed his customers to issue checks payable to              
          his children.  Petitioner attempted to disguise his farming                 
          income by diverting to his children farming receipts that were              
          owed to petitioner.  We find that this scheme of concealing his             
          assets provides further evidence that petitioner attempted to               
          avoid income taxes.                                                         
               Although a criminal conviction under section 7206 is not               
          dispositive, it provides probative evidence that the taxpayer               
          intended to evade taxes.  Wright v. Commissioner, 84 T.C. 636,              
          643-644 (1985).  Petitioner was convicted of filing false Federal           
          income tax returns in violation of section 7206 in 1990, 1991,              
          and 1992.  United States v. Hoover, 175 F.3d at 567.  We also               
          note that petitioner was convicted of making false statements on            
          a student loan application.                                                 







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