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The circumstantial evidence of fraud alleged by respondent
is dwarfed by petitioners' credible testimony. In addition, Ms.
Myers admitted at trial that several of petitioners' documents
and other attempts of proving their claimed deductions were
rejected without serious consideration of either petitioners'
veracity or the authenticity of proffered documents.
We find that there is not in this record any credible
evidence in support of respondent's burden to establish by clear
and convincing evidence that any part of petitioners'
underpayment for either of the years in issue is due to fraud.
Accordingly, we hold that petitioners are not liable for the
section 6663(a) fraud penalty.
To reflect the foregoing,
Decision will be entered
under Rule 155.
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Last modified: May 25, 2011