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preparation of the tax returns shows that she was aware of the
requirements to report income. Frank purchased a number of
expensive vehicles over the years and paid for Larry’s, Ronnie’s,
and Sylvia’s acquisitions of property and vehicles. He applied
for loans and mortgages. The record does not show that Frank’s
and Katherine’s age and health conditions affected their mental
capacity. Thus, the record does not demonstrate that Frank’s and
Katherine’s lack of formal education, age, or health conditions
prevented them from being aware that they were required to report
all of their income. Accordingly, we conclude that the factors
raised by petitioners do not negate the inferences of fraud
raised by the other badges of fraud present in the instant cases.
(9) Summary Regarding Intent
On the basis of the foregoing, we conclude that for each
year in issue respondent has proven through clear and convincing
evidence that Frank and Katherine intended to evade taxes they
knew or believed were owed.
c. Conclusion Regarding Fraud and Statute of
Limitations
We have considered the other arguments raised by petitioners
in their briefs but find them to be without merit. On the basis
of the foregoing, we hold that for each year in issue respondent
has proven, by clear and convincing evidence, an underpayment of
tax and that some portion of the underpayment was attributable to
fraud. Accordingly, the fraud exception to the statute of
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