Jerry L. Crabtree - Page 39

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                  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’                  
                  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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