-15-
opportunity to observe Mr. Wickersham, and we found his testimony
generally to be credible. Furthermore, many of the witnesses
corroborated much of Mr. Wickersham's testimony. Mr.
Wickersham's testimony does not indicate the presence of a
fraudulent intent.
E. The Section 7206(1) Conviction
Respondent contends that Mr. Wickersham's conviction under
section 7206(1) is evidence that Mr. Wickersham intended to evade
taxes.
While a conviction under section 7206(1) is a factor to be
considered, it is not dispositive, and this Court has
consistently interpreted the "due to fraud" language contained in
section 6663 to require proof of specific intent to evade a tax
believed to be owing. See Wright v. Commissioner, 84 T.C. 636,
639, 644 (1985). A conviction under section 7206(1) does not
establish as a matter of law that the taxpayer violated a legal
duty with the intent to evade taxes because the intent to evade
taxes is not an element of the crime charged under section
7206(1). See id. at 641, 643.
F. Conclusion
Apart from Mr. Wickersham's conviction under section
7206(1), the other badges of fraud are noticeably absent from the
case at bar. Furthermore, petitioners fully disclosed the
transaction involving the Peveto on the 1989 return. The only
evidence respondent adduced to establish fraud is Mr.
Wickersham's conviction under section 7206(1).
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