Tax Court In Brief | Fabian v. Comm'r | Fraudulent Returns, Constructive Receipt, And Guilty Plea | Don't Be Like Fabian

• Published date: 19 September 2022
• Subject Matter: Corporate/Commercial Law, Tax, Criminal Law, Corporate and Company Law, Income Tax, White Collar Crime, Anti-Corruption & Fraud, Shareholders
• Law Firm: Freeman Law
• Author: Freeman Law

THE TAX COURT IN BRIEF – SEPTEMBER 12TH – SEPTEMBER 16TH, 2022

Freeman Law's "The Tax Court in Brief" covers every substantive Tax Court opinion, providing a weekly brief of its decisions in clear, concise prose.

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Tax Litigation: The Week of September 12th, 2022, through September 16th, 2022

Fabian v. Comm'r, T.C. Memo 2022-94| September 13, 2022 | Halpern, Judge | Dkt. No. 25589-14

Summary: "A tax return is not evidence of the truth of the statements in it." Boiled down to a nutshell, this 44-page opinion regards taxpayer, Alan Fabian's (Petitioner's)'a highly-educated tax professional (CPA, no less)'effort to, essentially, defraud the United States Treasury through avoidance of his tax liability for periods dating back to 2002. The tax liabilities in issue were triggered by, among other things, elaborate and even coercive transactions and high-dollar but "ostensible" computer hardware sales-and-lease-back arrangements involving Petitioner and companies in which Petitioner owned or participated. (Aside: When the word "ostensible" is used repeatedly by the U.S. Tax Court to describe a taxpayer's financial transactions, the tax-liability outcome for those transactions is, likely, not good for the taxpayer.) Petitioner's spouse, Jacqueline Richards-Fabian, was also involved in the matter as the federal income tax returns in issue were joint returns. However, in a separate proceeding, she obtained certain innocent spouse relief, and the focus in this opinion was squarely on Petitioner. With regard to Petitioner: "Things . . . were not as they appeared." To give a flavor of the legal troubles brought upon himself, in 2007, a criminal investigation culminated with a multicount grand jury indictment charging him with, among other crimes, mail fraud and making and subscribing a false tax return for 2003. Petitioner pleaded guilty to certain counts, and he signed a plea agreement and a supporting statement of facts summarizing events that occurred between 2001 and 2004 and that supported his guilty plea'a principal theme was fraud, including fraudulent transactions involving $32,000,000 and Petitioner's use of such windfalls to generously donate to his children's private school, to pay for private jet travel, etc. Ultimately, civil tax assessments were noticed and fraud penalties were assessed. Petitioner challenged those...