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thought that if I received the money and I paid them back
readily then that was not a taxable issue.” Respondent has not
shown with clear and convincing evidence that petitioner’s
understatements of income in 1995 and 1996 were the result of
fraudulent intent rather than of petitioner’s negligence or
misunderstanding of the tax law. See Carr v. Commissioner, T.C.
Memo. 1978-408.
Although petitioner was employed with the Internal Revenue
Service as a valuation engineer during the years at issue (a
position from which he has since resigned), we are not prepared
to say that this circumstance, in and of itself, is
circumstantial evidence of fraud. Respondent does not allege,
and the record does not suggest, that petitioner’s employment
gave him any expertise or specialized knowledge in the tax laws.
Insofar as the record reveals, petitioner had no training or
experience in legal or accounting issues, and his work as a
valuation engineer appears to have been only tangentially
related to substantive tax issues. We are not persuaded that
petitioner’s general intelligence and sophistication, or the
fact or manner of his preparing his own tax returns for 1995 and
1996 (with errors not totally in his favor, as respondent
concedes), were such as to establish the requisite intent to
evade taxes. Cf. Liddy v. Commissioner, T.C. Memo. 1985-107
(holding that former White House staff assistant and general
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