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Respondent also contends that TCM is liable for fraud for failure
to report substantially the same amounts for 1987 that petitioner
prevented TCM from receiving. Specifically, respondent contends
that TCM is liable for fraud for 1987 because petitioner
concealed from TCM’s tax preparer information about the NSA,
Midtex Relays, and other checks diverted from TCM’s account,
petitioner signed TCM’s 1987 return even though he knew it was
inaccurate and omitted substantial income, TCM pled guilty under
section 7206(1) to knowingly making false statements on its
amended 1988 return, and petitioner used a complex series of
transactions to divert payments from NSA to himself and Camaro.
Fraud is never presumed or imputed; it must be established
by independent evidence of fraudulent intent. Toussaint v.
Commissioner, 743 F.2d 309, 312 (5th Cir. 1984), affg. T.C. Memo.
1984-25; Petzoldt v. Commissioner, 92 T.C. 661, 700 (1989);
Beaver v. Commissioner, 55 T.C. 85, 92 (1970). We may not impute
from our finding that petitioner is liable for fraud that TCM is
also liable for fraud. To establish that TCM is liable for the
fraud penalty for 1987, respondent must show by clear and
convincing evidence that, as president and CEO of TCM,
petitioner, in addition to having knowledge of his own obligation
to report the income he prevented TCM from receiving, knew that
TCM was liable for tax on at least some of the funds he caused
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