-18-
Evid. 803(8); see Little v. Commissioner, T.C. Memo. 1996-270.
Respondent has not proven fraud regarding petitioner's receipt of
the land sale proceeds ($676,721) because respondent did not
prove by clear and convincing evidence that petitioner did not
return any of those proceeds to the Lopps in 1984 or hold the
funds for them in 1984 (i.e., that the proceeds were income to
petitioner in 1984), or that petitioner's underpayment of tax on
that income was due to fraudulent intent.
Respondent points out that petitioner used an incorrect
Social Security number on the time deposits and the loan
applications (i.e., he used 530-23-2619 instead of 530-26-2319).
Respondent contends that petitioner did this intentionally to try
to make the transactions untraceable to him. However, respondent
did not prove that petitioner intentionally used an incorrect
Social Security number. Reversing two digits in a Social
Security number may cause suspicions, but absent evidence that
petitioner purposely altered his Social Security number at the
time of these transactions, it does not in itself prove fraud.
We will not find fraud under circumstances which at most create
suspicion. Davis v. Commissioner, 184 F.2d 86, 87 (10th Cir.
1950); Katz v. Commissioner, 90 T.C. 1130, 1144 (1988); Green v.
Commissioner, 66 T.C. 538, 550 (1976). Petitioner was acquitted
of embezzlement and failure to report as income $676,721 from the
Lopps' sale of land. Respondent has not shown by clear and
convincing evidence that petitioner's underpayment of tax
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