- 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 notPage: Previous 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 Next
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