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Bradford case as indicating fraud which is present in the instant
case is the understatement of income. Here, the understatement
of income results from petitioner's taking an improper deduction.
All petitioner's receipts of income were reported in his gross
income on his returns for each of the years here in issue.
Respondent makes some arguments that certain items reported by
petitioner were reported in an improper manner, but does not have
any fraud contention based on underreporting of receipts by
petitioner. Respondent questions the type of the records
petitioner kept. Petitioner's records were incorrect in that
they had shown airline tickets purchased by MBWC as part of his
expense, but otherwise were reasonably good records for an
individual to keep. The controlling question here is whether
respondent has shown by clear and convincing evidence that
petitioner claimed the deductions for air fares on his tax
returns knowing that he was not entitled to claim the deductions,
and intending by claiming those deductions to evade a tax he knew
to be owing. From the evidence as a whole, we conclude that
respondent has failed to show that petitioner was aware that he
was not entitled to claim the air fare deductions, and has failed
to show any intent by petitioner to evade tax by claiming these
deductions.
Petitioner took all his records to a return preparer for
preparation of his return. This return preparer did not question
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