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We are similarly unconvinced that Mr. Feinsmith knew that
either of his returns was fraudulent when he filed it. In order
to support a determination of fraud, respondent must prove
clearly and convincingly that Mr. Feinsmith had at the time he
filed his personal income tax returns the requisite intent to
evade taxes known or believed to be owing. As we read the
cooperation agreement and the affidavits, those documents were
carefully worded so as to speak as of the time that the documents
were prepared and not as of the time that the returns were filed.
Those documents merely establish that Mr. Feinsmith knew about
the unreported income when the documents were prepared. They do
not establish that he knew about that income when the returns
were filed.
Moreover, as of March 29, 1985, the date of the cooperation
agreement, Mr. Feinsmith’s 1984 return had not yet been filed.
The cooperation agreement provided explicitly that it would be
void (meaning that Mr. Feinsmith would be subject to prosecution,
including through the use of any statement or document that he
made or gave to the U.S. Attorney’s Office during its
investigation) were Mr. Feinsmith not to comply fully with the
expressed understandings of the parties thereto. One of those
understandings was that Mr. “Feinsmith must at all times give
complete, truthful and accurate information and testimony and
must not commit any further crimes whatsoever.” We find it
unlikely that Mr. Feinsmith would have intentionally omitted
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