A Court of Appeals upheld a ruling against a taxpayer for filing false tax returns connected to his wife’s embezzlement of millions of dollars from her employer. The taxpayer argued he thought the funds were his wife’s gambling winnings, which he used to buy a yacht, a snowmobile, and other luxury items. At the appeal trial, the taxpayer argued the district court erred in not allowing evidence of his cognitive deficiencies, consisting of expert testimony and his high school transcript that contained numerous “E” grades. However, the expert could not rule out that the taxpayer’s performance during his cognitive exam was the result of malingering, and the high school transcript contained “an unexplained grading system and imprecise IQ scores.” Based on these and the taxpayer’s own testimony, the court agreed he was aware the couple was spending more than they reported and was found to have not disclosed all income to his accountants. (U.S. v. Mills (July 22, 2022) U.S. Court of Appeals, Third Circuit, Case No. 21-2423)
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