Michael and Penny Rhodes - Page 20

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               Because the Court concludes that Ms. Rhodes did not                    
          purchase items wholesale from Frank’s, or anyone claiming to be             
          associated with Frank’s, it follows that Ms. Rhodes manufactured            
          fake purchase orders solely to inflate her Schedule C expenses              
          for Keepsake.  In addition, Ms. Rhodes went to great lengths to             
          increase her expenses by fabricating trips for both Amway and               
          Keepsake to purchase supplies, give estimates, make deliveries,             
          and “prospect”, even going as far as to write places and mileage            
          on a monthly calendar.  She then claimed deductions for car and             
          truck expenses for both Amway and Keepsake.  Ms. Rhodes’s gross             
          overstatement of her Schedule C expenses establishes fraud.                 
          Drobny v. Commissioner, supra at 1349; Clark v. Commissioner,               
          supra.  Furthermore, the Court has held that keeping inadequate             
          records, providing implausible or inconsistent explanations of              
          behavior, dealing in cash, engaging in a pattern of behavior that           
          indicates an intent to mislead, and failing to cooperate with tax           
          authorities provides circumstantial evidence that may give rise             
          to a finding of fraud.  Bradford v. Commissioner, supra;                    
          Christians v. Commissioner, supra; Niedringhaus v. Commissioner,            
          supra.  Respondent showed at trial that Ms. Rhodes did each of              
          these.  She fabricated records that were inconsistent with her              
          claimed deductions.  When asked at trial to substantiate the                
          claimed expenses and deductions, Ms. Rhodes’s explanations were             
          vague and highly implausible.  She claimed to have dealt with               

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