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Recklitis v. Commissioner, supra. Respondent need not establish
that tax evasion was a taxpayer’s primary motive but may satisfy
his burden by showing a tax-evasion motive played a part in
taxpayer’s conduct. Recklitis v. Commissioner, supra.
Fraud is not to be imputed or presumed but must be
established by some independent evidence of fraudulent intent.
Niedringhaus v. Commissioner, supra; Stone v. Commissioner, supra
at 224. A mere understatement of tax does not establish fraud.
Estate of Upshaw v. Commissioner, 416 F.2d 737, 741 (7th Cir.
1969), affg. T.C. Memo. 1968-123; Otsuki v. Commissioner, supra.
While a taxpayer’s failure to file a tax return may be an
indication of fraud, it does not, by itself, establish fraud.
Recklitis v. Commissioner, supra at 910; Kotmair v. Commissioner,
86 T.C. 1253, 1261 (1986). However, when a taxpayer’s failure to
file is combined with other signs or circumstances establishing
an intent to conceal, mislead, or otherwise prevent collection of
tax, an inference of fraud is justified. Recklitis v.
Commissioner, supra at 911; see Kotmair v. Commissioner, supra at
1261.
II. Contentions of the Parties
Petitioner asserts that respondent has not met his burden of
proof under Rule 142(b) and section 7454(a). Petitioner contends
that his failure to file tax returns timely for the years in
issue resulted from the delay by Agent Riley in examining
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