A taxpayer recently had his motion denied for reconsideration of a fraud penalty, causing us to recall a Tax Court case involving the same taxpayer in which he attempted to hide millions of dollars by having his mistress “hold on to” a condo, cars, furs, and jewelry, totaling $8.7 million. He also transferred shares of his company to a trust, with the mistress as trustee, for the future benefit of the mistress and their child. Once the taxpayer was legally divorced, the mistress ended their relationship and would not transfer the shares back to the company. A state court judgment ordered the mistress to repay $4,551,931 to the company, but she filed for bankruptcy and the money was never recovered. (Boulware v. Comm. (April 27, 2021) U.S. Court of Appeals, Ninth Circuit, Case No. 19-73235; HIE Holdings, Inc. v. Comm., TCM 2009-130)
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