- 39 -
Finally, respondent asserts that petitioners’
explanation of their refusal to report a robbery indicates
fraud on their part. Mr. Eddie Crabtree testified that his
brother was robbed at gunpoint of approximately $15,000.
Mr. Eddie Crabtree further testified that Mr. Morton,
petitioners’ accountant, “was afraid to report it because
the IRS would say--would throw up a yellow flag or red
flag.” Respondent argues on brief that “the evidence
indicates petitioners had every right to fear an audit
given the fraudulent nature of the returns in issue.” We
do not agree with respondent that petitioners’ failure to
report the alleged robbery, based upon the recommendation
of their accountant, supports a finding of petitioners’
fraud.
On the basis of the entire record, we find that
respondent has not met his burden of proving that any part
of the underpayment of tax in these cases is due to fraud.
Accordingly, we do not sustain respondent’s determination
that Crabtree Investments, Ms. Jerry Crabtree, and
Mr. Eddie Crabtree are liable for the fraud penalty under
section 6663(a).
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