- 48 - 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 underreportingPage: Previous 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 Next
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