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to file returns, report income, and pay taxes. See id. at 1005.
The taxpayer's total gross income for his 1954 taxable year
dictated the inference that he knew he owed taxes for that year.
In the case before us no inference is necessary because
petitioner herself testified that had she prepared and filed tax
returns for the 1987 and 1990 taxable years, she would have owed
taxes.
Furthermore, Nelon v. Commissioner, supra, is
distinguishable. In that case, the taxpayer, a high school
dropout and inexperienced in bookkeeping and financial matters,
operated a logging business as a sole proprietorship. The
taxpayer's income from his logging business could easily be
traced from the Forms 1099 supplied by payers. The taxpayer
joined a tax protester group and did not file tax returns under
the belief that he was not subject to Federal income tax. The
Commissioner asserted that the taxpayer was liable for the
addition to tax for fraud, contending that the following facts
established fraud: (1) Failure to file tax returns for 5
consecutive years; (2) consistent failure to report substantial
amounts of income; (3) failure to maintain books and records of
his logging business; (4) failure to pay estimated taxes; and (5)
cashing, rather than depositing, checks derived from his logging
business. We held that the Commissioner did not clearly and
convincingly establish that the taxpayer's underpayment was due
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