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established how this evidence pertains to petitioners.
Apparently, respondent would have us infer that the advice itself
was in some manner fraudulent and that petitioners played a role
in it. The record does not clearly support any such inference.
The advice that ACT’s accountants provided Daniell is consistent
with spreadsheets in evidence, apparently prepared by ACT’s
accountants, which allocated the ACT proceeds partly to loan
repayments and partly to other sources, consistent with the
manner in which petitioners reported them on their individual tax
returns. Without more, it is impossible to know whether ACT’s
accountants were negligent in doing their work and in giving
advice to Daniell’s accountant (and presumably to petitioners).
There is no evidence to indicate fraud on the part of ACT’s
accountants.
In Association Cable TV, Inc. v. Commissioner, T.C. Memo.
1995-596, we held that ACT acted with fraudulent intent in
representing falsely to the Internal Revenue Service that it had
adopted a formal plan of liquidation under section 337, attaching
false minutes to its return and treating the sale of its assets
as nontaxable on its Federal corporate income tax return.
Whatever inferences we might draw from ACT’s fraudulent
intentions in this regard, we conclude that respondent has failed
to meet his burden of proving by clear and convincing evidence
that petitioners acted with fraudulent intent in underreporting
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