Richard K. and Christine M. McGirl - Page 37

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          guilty to State sales tax violations.  Although this conviction             
          does not, in and of itself, establish a fraudulent intent, we               
          consider the crime evidence of a propensity to defraud.  Petzoldt           
          v. Commissioner, 92 T.C. at 701-702 (1989), McGee v.                        
          Commissioner, 61 T.C. 249, 260 (1973), affd. 519 F.2d 1121 (5th             
          Cir. 1975).                                                                 
               To summarize, after carefully reviewing all of the facts and           
          circumstances present in this record, we conclude that respondent           
          has clearly and convincingly proven that an understatement of tax           
          for 1989, 1990, and 1991 was due to fraud on the part of Mr.                
          McGirl.  Petitioners have failed to show that any portion of the            
          underpayment was not due to fraud.  Therefore, we sustain                   
          respondent's determination that Mr. McGirl is liable for the                
          penalty for fraud under section 6663(a) for all of the years                
          under consideration.                                                        
               C.  Mrs. McGirl Not Liable for Fraud                                   
               Mrs. McGirl's testimony was not fully credible.  Her support           
          of Mr. McGirl's statement that the cash register was broken and             
          that it was economically infeasible to repair it demonstrates               
          that part of her testimony was not plausible.                               
               Fraud is never presumed or imputed; it must be established             
          by independent evidence that establishes a fraudulent intent on             
          the taxpayer's part.  Otsuki v. Commissioner, 53 T.C. at 106.               
          Even if Mrs. McGirl's testimony is not credible in all respects,            
          we may still be left with no more than a suspicion of fraud.  See           
          Jenkins v. Commissioner, T.C. Memo. 1995-563.  We shall not                 


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