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Issue 3. Fraud
Respondent determined fraud additions to tax against both Mr.
and Mrs. Marzullo pursuant to section 6653(b) for each of the years
under consideration. Mr. Marzullo has conceded the fraud additions
for 1987 and 1988 but contests the imposition of the fraud addition
for 1986. Mrs. Marzullo contends that she is not liable for the
fraud additions for any of the years under consideration.
To prevail, the Commissioner must prove fraud by clear and
convincing evidence. Sec. 7454(a); Rule 142(b). The Commissioner
cannot satisfy the burden of proving fraud simply by piling
inference upon inference. Goldberg v. Commissioner, 239 F.2d 316,
320 (5th Cir. 1956), revg. and remanding T.C. Memo. 1954-242. The
Commissioner must show that the taxpayer intended to evade taxes
known to be owing by conduct intended to conceal, mislead, or
otherwise prevent the collection of such taxes. Parks v.
Commissioner, 94 T.C. 654, 661 (1990); Hebrank v. Commissioner, 81
T.C. 640, 642 (1983).
Fraud is never presumed. Beaver v. Commissioner, 55 T.C. 85,
92 (1970). A taxpayer's sophistication, education, and
intelligence may be considered in determining whether or not he had
fraudulent intent. See Halle v. Commissioner, 175 F.2d 500 (2d
Cir. 1949), affg. 7 T.C. 245 (1946); Niedringhaus v. Commissioner,
99 T.C. 202, 211 (1992).
Fraud cannot be imputed from one spouse to another. Hence, in
the case of a joint return, where fraud is asserted against a
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