- 37 -
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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