                           T.C. Memo. 2000-277



                         UNITED STATES TAX COURT



                  HUBERT R. G. RANEY, Petitioner v.
            COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 18200-98.                        Filed August 30, 2000.


     Hubert R. G. Raney, pro se.

     J. Scot Simpson, for respondent.



              MEMORANDUM FINDINGS OF FACT AND OPINION


     RUWE, Judge:   Respondent determined deficiencies in

petitioner’s Federal income taxes and additions to tax as

follows:

                                      Additions to Tax
     Year      Deficiency        Sec. 6651(f)   Sec. 6654(a)

     1994       $7,991             $5,856            $404
     1995        8,166              6,119             442
     1996        8,168              6,042             428
                                 - 2 -

     The issues for decision are:    (1) Whether petitioner

received taxable wage and pension income during each of the years

in issue; (2) whether petitioner is liable for additions to tax

under section 6651(f)1 for fraudulent failure to file income tax

returns for the years in issue; and (3) whether petitioner is

liable for the additions to tax under section 6654(a) for failure

to pay estimated tax for the years in issue.

     When this case was called for trial, respondent moved,

pursuant to Rule 91(f), to compel petitioner to enter into a

proposed stipulation of facts.    After hearing the parties on the

motion, we determined that there was no real dispute about the

facts proposed for stipulation and that there was no good reason

why the facts and exhibits attached to the stipulation should not

be made part of the evidentiary record.    We therefore granted

respondent’s motion and deemed the matters contained in the

proposed stipulation to be facts for purposes of this case.    See

Rule 91(f).   After we granted the motion, the parties decided

that they would not call any witnesses, and the case was

submitted on the stipulated facts.




     1
      Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the years in issue, and
all Rule references are to the Tax Court Rules of Practice and
Procedure.
                                - 3 -

                          FINDINGS OF FACT

     Petitioner resided in Tampa, Florida, at the time he filed

his petition.    Petitioner was married and had no dependent

children during the years in issue.

     Petitioner was employed by the U.S. Postal Service.    During

the years 1994, 1995, and 1996, petitioner received wage income

from the U.S. Postal Service in the amounts of $34,490, $35,261,

and $35,428, respectively.    Petitioner received Forms W-2, Wage

and Tax Statement, from the U.S. Postal Service reflecting these

wages.    Petitioner also received pension income from the Defense

Finance and Accounting Service for the years 1994, 1995, and 1996

in the amounts of $6,258, $6,420, and $6,591, respectively.

     Petitioner provided the U.S. Postal Service with Forms W-4,

Employee’s Withholding Allowance Certificate, dated February 15,

1994, and April 7, 1993; he claimed 15 withholding allowances on

each form.    The U.S. Postal Service withheld Federal income taxes

from petitioner’s wages in the amounts of $183.95, $7.84, and

$112 for the years 1994, 1995, and 1996, respectively.

Petitioner made no estimated tax payments for the years in issue.

     Petitioner sent Forms 1040, U.S. Individual Income Tax

Return, to respondent for the years in issue.    The Forms 1040

were received by the Internal Revenue Service on December 17,

1997.    On those Forms 1040, petitioner reported no income.

Respondent did not accept the above-referenced Forms 1040 as tax
                                 - 4 -

returns.   Petitioner has not filed any other income tax returns

for the years in issue.

     In correspondence with respondent, petitioner indicated that

he did not believe that the tax laws required him to pay tax on

the income that he received.    Petitioner continues to take that

position in his brief.

                                OPINION

     Petitioner received wage income from the U.S. Postal Service

during each of the years 1994, 1995, and 1996 in the respective

amounts of $34,490, $35,261, and $35,428.   Petitioner also

received pension income during 1994, 1995, and 1996 in the

respective amounts of $6,258, $6,420, and $6,591.2   Petitioner

generally argues that no act of Congress authorizes taxation of

these amounts.   We disagree.   All these amounts constitute gross

income under section 61.   Petitioner’s arguments to the contrary

are wholly without merit and not worthy of further analysis.      We

hold that petitioner has deficiencies in income taxes in the

amounts determined in the notice of deficiency.

     Respondent also determined that petitioner is liable for

additions to tax pursuant to section 6651(f) for fraudulent

failure to file returns for each of the years in issue.   The


     2
      In computing the amount of the deficiencies, respondent
determined that petitioner was liable for an increase in tax of
10 percent on the pension distributions pursuant to sec. 72(t).
Petitioner has not disputed this and offered no evidence on this
point.
                                - 5 -

existence of fraud is a question of fact to be resolved upon

consideration of the entire record.     See     Gajewski v.

Commissioner, 67 T.C. 181, 199 (1976), affd. without published

opinion 578 F.2d 1383 (8th Cir. 1978); Estate of Pittard v.

Commissioner, 69 T.C. 391 (1977).     Fraud is not to be imputed or

presumed, but rather must be established by independent evidence

of fraudulent intent.    See Beaver v. Commissioner, 55 T.C. 85, 92

(1970); Otsuki v. Commissioner, 53 T.C. 96 (1969).           Fraud may not

be found under “circumstances which at the most create only

suspicion.”    Davis v. Commissioner, 184 F.2d 86, 87 (10th Cir.

1950); Petzoldt v. Commissioner, 92 T.C. 661, 700 (1989).

       A finding of fraud requires proof of specific intent to

evade a tax believed to be owing.    If an understatement of tax

is caused by a good faith misunderstanding of the tax laws, the

understatement would not be due to fraud.       See Niedringhaus v.

Commissioner, 99 T.C. 202, 217 (1992).        A good faith

misunderstanding for this purpose can exist even if the

misunderstanding is objectively unreasonable.       See id. at 216-

217.    We have cautioned, however, that a good faith

misunderstanding of the law is different than disagreement with

the law or a belief that the law is or may be unconstitutional.

See id. at 217-218.
                                 - 6 -

     The main thrust of petitioner’s position in this case is

that the tax laws do not require him to pay taxes on the income

that he received.     While we believe that petitioner’s position is

objectively unreasonable, the sparse evidence in the record

before us does not clearly and convincingly negate petitioner’s

implicit claim that he was acting on his good faith understanding

of the law.   Of course, we may question whether petitioner’s

purported misunderstanding of the law was the product of good

faith.   However, suspicions are not a substitute for evidence.3

See id. at 210.     Respondent bears the burden of proving

fraudulent intent by clear and convincing evidence.     See sec.

7454(a); Rule 142(b).     Respondent has not done so.   We therefore

hold that petitioner is not liable for the additions to tax under

section 6651(f).4

     Petitioner bears the burden of proof regarding the section

6654(a) additions to tax for failure to pay estimated tax.

Petitioner offered no evidence regarding the section 6654(a)




     3
      The record before us contains no evidence of petitioner’s
business experience, educational background, prior history of
filing income tax returns, or dealings with the Internal Revenue
Service, prior to 1994.
     4
      In respondent’s brief, he requests that we, on our own
motion, impose an additional penalty under sec. 6673. Given the
fact that petitioner has prevailed on the sec. 6651(f) issue, we
decline respondent’s invitation.
                              - 7 -

additions to tax, nor did he address this issue in his brief.       We

therefore uphold respondent’s determination on this issue.



                                           Decision will be entered

                                      for respondent with respect

                                      to the deficiencies and the

                                      additions to tax under section

                                      6654(a) and for petitioner

                                      with respect to the additions

                                   to tax under section 6651(f).
