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collaterally estop a taxpayer from denying that he acted
fraudulently for purposes of section 6653(b), it does constitute
persuasive evidence of fraud. See Morse v. Commissioner, T.C.
Memo. 2003-332; Parsons v. Commissioner, T.C. Memo. 2000-205;
Biaggi v. Commissioner, T.C. Memo. 2000-48, affd. 8
Fed. Appx. 66 (2d Cir. 2001). Further, absent credible evidence
showing that the willful filing of the false tax return was done
for a purpose other than defrauding the Government of taxes owed,
the conviction under section 7206(1) is highly persuasive
evidence that fraud was committed. Mr. Hamilton failed to
proffer any evidence demonstrating that his willful filing of a
false tax return for 1988 was done for any reason other than
evading Federal income taxes owed for that year. Accordingly,
this constitutes highly persuasive evidence that Mr. Hamilton
acted fraudulently.
Thus, upon consideration of the entire record, we find that
respondent has proven by clear and convincing evidence that
Mr. Hamilton acted with the requisite fraudulent intent, and that
the entire understatement of income for 1988 is due to fraud. We
therefore sustain respondent’s determination that Mr. Hamilton is
liable for the addition to tax for fraud under section 6653(b).
C. Whether Petitioners Are Liable for Additions to Tax for
Their Substantial Understatement of Tax for 1988
Section 6661(a) provides for a 25-percent addition to tax
for the substantial understatement of income tax. An
“understatement” is defined as the excess of the tax required to
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