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arguing that petitioner knew and intentionally misstated the
bases of the stock he sold in 1988 and 1989. We are not
convinced that he did. Respondent has not offered any evidence
that petitioner intended to underpay tax that is as convincing as
the many indications that his conduct is more fairly viewed as
negligent.
Respondent points out that petitioner was an experienced tax
attorney. While that is a factor to be considered, it does not
establish that he had fraudulent intent. We do not find fraud
under "circumstances which at most create only suspicion." Davis
v. Commissioner, 184 F.2d 86, 87 (10th Cir. 1950); Katz v.
Commissioner, 90 T.C. 1130, 1144 (1988). There is neither direct
evidence nor enough circumstantial evidence to show clearly and
convincingly that the understatements on the returns were due to
fraud.
5. Conclusion
We hold that petitioner is not liable for the addition to
tax for fraud for 1988 and the fraud penalty for 1989.
B. Statute of Limitations
Respondent mailed the notice of deficiency to petitioners
more than 6 years after they filed their returns for 1988 and
1989. Thus, the statute of limitations bars assessment and
collection of the deficiencies determined for 1988 and 1989,
unless petitioners’ returns for those years were false or
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