- 54 -
adjustments. A high level of negligence does not alone prove
fraud. Fraud may not be imputed or presumed from “‘circumstances
which at most create only suspicion.’” Webb v. Commissioner, 394
F.2d 366, 377 (5th Cir. 1968) (quoting Carter v. Campbell, 264
F.2d 930, 935-936 (5th Cir. 1959)), affg. T.C. Memo. 1966-81.
“Fraud implies bad faith, intentional wrongdoing and a
sinister motive. * * * Negligence, whether slight or
great, is not equivalent to the fraud with intent to
evade tax named in the statute. The fraud meant is
actual, intentional wrongdoing, and the intent required
is the specific purpose to evade a tax believed to be
owing. Mere negligence does not establish either. * * *”
[Id.]
If we leave aside petitioner’s concealing $3,000 in cash each year,
his explanations for the other adjustments, while not establishing
that the items should not be included as income, refute an
assertion that he had fraudulent intent in omitting the items from
his returns. As a result, the section 6663(a) fraud penalty is not
sustained with respect to the remaining adjustments.
To reflect the foregoing and concessions by the parties,
Decision will be entered
under Rule 155.
Page: Previous 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 Last modified: May 25, 2011