Eryck C. Aston - Page 11

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          (1988); Shaw v. Commissioner, 27 T.C. 561, 569-570 (1956), affd.            
          252 F.2d 681 (6th Cir. 1958).                                               
               In order to sustain his heavy burden of proof, respondent              
          relies on the testimony of Revenue Agent Bayles and the report              
          Revenue Agent Bayles prepared in connection with the audit of               
          petitioner’s returns.  The report contains merely the revenue               
          agent’s conclusions.  Notably, Revenue Agent Bayles concluded               
          that petitioner was liable for the addition to tax/penalty for              
          fraud for 1988 and 1989 but not for 1987.  Furthermore, Revenue             
          Agent Bayles’s testimony was conclusory--he merely stated which             
          badges of fraud he felt were present.  Respondent provided no               
          evidence to corroborate Revenue Agent Bayles’s conclusory                   
          statements.                                                                 
               In light of respondent’s document retention/destruction                
          policy, we understand why respondent did not have any additional            
          documentary evidence to present at trial.  This policy, however,            
          does not relieve respondent of his burden of proof.  On the basis           
          of the evidence, we conclude that respondent has failed to                  
          sustain his heavy burden of proving by clear and convincing                 
          evidence that petitioner is liable for the additions to tax and             
          penalties for fraud.  Accordingly, we do not sustain any of the             
          additions to tax or penalties for fraud.                                    
               B.   Remaining Issues                                                  
               Petitioner admitted that he did not raise collection                   






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