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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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