-16-
While the section 7206(1) conviction may raise our
suspicions, mere suspicion does not prove fraud, and we cannot
find that respondent sustained his heavy burden to prove fraud by
clear and convincing evidence. See Rinehart v. Commissioner,
T.C. Memo. 1983-184. After reviewing all of the facts and
circumstances, we conclude that respondent has failed to prove
clearly and convincingly that for 1989 Mr. Wickersham intended to
evade taxes known to be owing by conduct intended to conceal,
mislead, or otherwise prevent the collection of taxes.
Accordingly, we do not sustain the fraud penalty for 1989.
II. Period of Limitations/Deficiency for 1989
Respondent issued the statutory notice of deficiency in the
case at bar more than 6 years after petitioners filed the 1989
return. The 1989 return is not a false or fraudulent tax return
with the intent to evade tax. See supra pp. 10-17. Therefore,
section 6501(c)(1) is inapplicable to the case at bar, and the
assessment of any deficiency for 1989 is barred by the expiration
of the period of limitations provided by section 6501.
Accordingly, the issue of whether there is a deficiency for 1989
is moot.
To reflect the foregoing,
Decision will be entered
for petitioners.
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