- 38 -
sustain respondent's determination of fraud when we are only left
with a suspicion of fraud. Green v. Commissioner, 66 T.C. 538,
550 (1976); see Comparato v. Commissioner, T.C. Memo. 1993-52.
Fraud cannot be imputed from one spouse to another. Sec.
6663(c).15
Respondent has failed to show that Mrs. McGirl was
responsible for understating income, destroying the Yogurt
Station's invoices and records, misleading the MDR or IRS agents,
or that she was in any way involved in creating the fabricated
auto logs.
Respondent has not affirmatively established, by clear and
convincing evidence, that Mrs. McGirl intended to evade taxes.
We cannot conclude on this record that Mrs. McGirl committed
fraud where respondent has failed to adduce evidence showing
intentional wrongdoing.
5. Negligence Penalty on Unreported Taxable Dividends
Petitioners admit they omitted the dividend income from
their joint Federal income tax returns. Petitioners have offered
no evidence that they were not negligent or had reasonable cause
to omit the dividend income. In fact, petitioners' briefs fail
to address the negligence issue at all. We cannot be sure if
15 Since we have upheld respondent's determination of fraud with
respect to Mr. McGirl, we cannot also find him liable for
negligence. Therefore, we cannot find Mrs. McGirl liable for
negligence as she filed a joint return with Mr. McGirl and he
would be jointly liable for any negligence penalty imposed on his
wife. See Aflalo v. Commissioner, T.C. Memo. 1994-596.
Page: Previous 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 NextLast modified: May 25, 2011