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considered an innocent spouse within the meaning of section
6013(e). Therefore, we decline to apply that section.
D. Fraud Penalties--Mr. Ortiz
Whether Mr. Ortiz is liable for fraud penalties is more
troublesome. The evidence is conflicting, and the indicia of
fraud are weak. To be sure, his self-employment income from the
wholesale used car business was underreported in both years and,
according to the revenue agent who audited his returns, the books
and records of the business were not entirely adequate.
Therefore, the agent resorted to a bank deposits analysis in
reconstructing the income of the business. As we have found,
that analysis was flawed in certain respects. Furthermore, the
records and data Mr. Ortiz furnished to Mr. Solano, his
accountant and return preparer, were apparently sufficient to
enable Mr. Solano to determine business gross sales, cost of
goods sold, and expenses.
Although respondent argues that Mr. Ortiz presented altered
notations on checks received from Mr. Alvarado, it was not Mr.
Ortiz who changed the notations from "advances for autos" to
"prestamo", the Spanish word for loan. Mr. Alvarado made the
changes after the checks cleared his Puerto Rican bank.
Because of Mr. Ortiz' difficulty with the English language,
his testimony was given through an interpreter. He was not
represented by counsel. At times he appeared not to fully
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