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establishing fraud but must clearly and convincingly prove that
petitioner intended to evade tax. Sec. 7454(a); Rule 142(b);
Parks v. Commissioner, 94 T.C. 654, 660-661 (1990); Wright v.
Commissioner, supra at 643-644. This burden is met where
respondent proves conduct intended to conceal, mislead, or
otherwise prevent the collection of tax. Parks v. Commissioner,
supra at 661. Fraud is not to be imputed or presumed but rather
must be established by some independent evidence. Beaver v.
Commissioner, 55 T.C. 85, 92 (1970).
Respondent has failed to meet his burden. Respondent’s
witnesses either supported petitioner’s contentions or presented
contradictory and unconvincing testimony. In addition, the
typical indicia of an intent to evade tax are not present.
Petitioner maintained adequate records, made all pertinent
information available to his secretaries (i.e., who prepared
records for Mr. Kisalus to use in preparing petitioner’s returns)
and subsequently to the Internal Revenue Service, cooperated with
the Internal Revenue Service’s investigation, and did not employ
any scheme to conceal income. Petitioner and his secretaries
recorded, in the handwritten ledger, the receipt of all customer
checks (i.e., those cashed or deposited in his personal account).
Mr. Kisalus, on whom petitioner relied, did not, however, use
this ledger to prepare the Company’s returns.
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Last modified: May 25, 2011