Hugh Wilkinson and Evelyn Wilkinson - Page 15

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          due of $40,000 on their 1989 Form 4868, Application for Automatic            
          Extension of Time to File U.S. Individual Income Tax Returns.                
          The Court questions why petitioners would have reported a $40,000            
          tax liability if it was indeed their intent to evade taxes.                  
               Fourth, respondent argues that petitioners' failure to file             
          timely returns, combined with their knowledge of a duty to file,             
          is evidence of fraud.  In essence, respondent argues that                    
          petitioners originally failed to file their 1988 and 1989 tax                
          returns with fraudulent intent, and that the subsequent                      
          delinquent filing was made only after petitioners became aware of            
          respondent's investigation.  Respondent cites Blackwell v.                   
          Commissioner, T.C. Memo. 1965-252, and Niedringhaus v.                       
          Commissioner, supra at 213, for the proposition that the later               
          filing of delinquent returns does not absolve a taxpayer of his              
          antecedent fraud.  In Niedringhaus, fraudulent intent was found              
          where the taxpayers filed their delinquent returns only after                
          notification of pending civil and criminal investigations.                   
               Although it is true that petitioners failed to file timely              
          tax returns, this action is consistent with petitioners' prior               
          actions.  Petitioners have historically filed delinquent returns,            
          opting to satisfy their tax liability with payments that include             
          interest, additions to tax, and/or penalties.  It is also                    
          important that the record shows no affirmative acts of                       
          concealment, such as filing false information.  See Zell v.                  

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