56 T.C. 213 (1971)
NATHANIEL M. STONE AND EVA P. STONE, PETITIONERS
COMMISSIONER OF INTERNAL REVENUE, RESPONDENT
United States Tax Court
May 6, 1971
Robert B. Milgroom and George A. Stella, for the petitioners.
A. W. Dickinson, for the respondent.
The petitioner, a physician, grossly understated his income for 3 consecutive years. He pleaded guilty to criminal charges of attempted tax evasion for those years, paid the fine, and served the sentence as imposed. Held:
1. His criminal conviction collaterally estops him, but not his wife, from denying fraud in this proceeding;
2. Without relying on the conviction, the respondent has proved the petitioner's fraud by clear and convincing evidence; and
3. Under the amendments of secs. 6013 and 6653(b), I.R.C. 1954, relating to ‘ innocent’ spouses, the petitioner's wife has not shown that she is entitled to be relieved of liability for the deficiencies, and the respondent has not shown that she is liable for the penalty for fraud.
The respondent determined deficiencies in and additions to the income tax of the petitioners as follows:
|| 6653(b) 
The issues for decision in this case are: (1) Whether the conviction of the petitioner Nathaniel M. Stone for income tax evasion collaterally estops him or the petitioner Eva P. Stone from denying fraud in this case; (2) whether on the facts, without regard to the conviction, the petitioners are liable for the deficiencies and the fraud penalty determined by the respondent; and (3) whether under the provisions recently added to sections 6013 and 6653(b) relating to ‘ innocent’ spouses, the petitioner Eva P. Stone is liable for any deficiency or for any fraud penalty. The respondent concedes that the petitioners' tax liability for 1959, 1960, and 1961 is now barred by the statute of limitations if the understatements of income were not due to fraud. FINDINGS OF FACT Some of the facts have been stipulated, and those facts are so found. The petitioners Dr. Nathaniel M. Stone and Eva P. Stone are husband and wife, who maintained their residence in Brookline, Mass., at the time the petition was filed in this case. For the taxable years 1959, 1960, and 1961, they filed their joint Federal income tax returns, using the cash method of accounting, with the district director of internal revenue, Boston, Mass. Dr. Stone will be referred to as the petitioner. The petitioner is a physician who has been specializing in diagnosis and treatment by X-ray since 1940. His work involved taking and reading X-ray photos, consulting with other doctors with respect to X-rays of their patients, and testifying as a witness in court on X-ray matters. The petitioner had two offices simultaneously during the years in issue, one in Boston, Mass., and the other in Malden, Mass. Also, he had a financial interest in a firm known as Belmont X-ray Associates (Belmont), which had an office in Belmont, Mass. In addition, he had an arrangement with Emmanuel Cohen, an X-ray technician, doing business as Parkway X-ray Laboratory (Parkway) in Roslindale, Mass. Under this arrangement, Dr. Stone read and diagnosed X-rays taken by Mr. Cohen in return for 40 percent of Mr. Cohen's receipts for such X-rays. Page 215
A substantial part of the petitioner's professional income, possibly the bulk of such income, consisted of payments from Massachusetts Medical Service (MMS), also known as Blue Cross-Blue Shield. He received payments from MMS under four different voucher numbers, each with a different address. The address used in connection with voucher number VO-1010 was the address of the front door of his Boston office; the address used in connection with voucher number MO-2328 was that of the rear door of the same building. Voucher number VO-1076 was listed at the address of Belmont, and voucher number VO-1088 was listed at the petitioner's home address. Miss Helen Foster, a medical secretary and X-ray technician, was in charge of the secretarial work and the patients' records during the years in issue. She worked in the Boston office. She performed such duties for the petitioner from the time he purchased the ‘ office’ in 1952 until June 1, 1962, leaving his employ immediately before the beginning of the respondent's examination of the income tax returns here in issue. The records kept in Dr. Stone's office included two record cards for each patient. One such card showed the patient's name, address, age, date of examination, referring physician, area to be X-rayed, and any Blue Shield information. The other record card also included the charge made for each examination and the date of payment. From the latter card, a billing card was made for the purpose of preparing the monthly statements. Also, a daily log was kept, listing patients in order to assign an X-ray number. However, cases involving actual treatment by the petitioner were not assigned numbers. For each of the petitioner's offices, in Boston and in Malden, a set of books described as ‘ cashbooks' was kept. Miss Foster's testimony described such books as ‘ cashbook number 1’ and ‘ cashbook number 2.’ Cashbook No. 1 contained records of receipts for X-rays and X-ray therapy. Cashbook No. 2 contained records of receipts for consultation fees, for expert testimony, and for the petitioner's treatment of students at the Middlesex School and the Concord Academy. When a fee for a single patient had to be split between the part for X-ray treatment, to be recorded in cashbook No. 1 and the part for consultation services, to be recorded in cashbook No. 2, the petitioner determined the portion of the fee attributable to each type of service. Such allocation was usually indicated on the bill, so that Miss Foster or the girls working under her could usually record the amounts in the proper cashbooks without asking the petitioner each and every time a receipt was recorded. The cashbooks were not marked or labeled in any way which would enable someone examining cashbook No. 1 to know or infer that there was also a cashbook No. 2. Page 216
Dr. Stone usually opened the mail in his office. He placed the incoming checks on Miss Foster's desk, and she would make the proper notation on the patient's record cards, and enter the payments in the appropriate cash book or books. At the end of the week, a total was made of the entries in cashbook No. 1 for the Boston office, and such amount was deposited in the petitioner's business checking account in the Somerville National Bank. Such deposits also included such checks from the Malden office as the petitioner brought to the Boston office for that purpose. The petitioner returned to Miss Foster enough checks to equal the amount to be deposited in the Somerville National Bank; the amounts representing the entries in cashbook No. 2 were taken by the petitioner personally and not deposited in the business account. Miss Foster did not know what happened to the checks which were not deposited by her. The doctor who had preceded the petitioner in his office, and for whom Miss Foster had worked in the same capacity since 1929, did not have two cashbooks. The system of two cashbooks was set up by the petitioner when he took over the office after the death of his predecessor. The amounts for consultation charges, which recorded in cashbook No. 2 and were not included in the weekly deposits to the petitioner's business account, were also not recorded on the patient's record card which contained information about charges and payments. Miss Foster was concerned about this practice because the items listed in cashbook No. 2 were not reflected on the record cards, and she mentioned to the petitioner that ‘ if in any future time any questions might arise about those entries in the second cash book, * * * I did not wish to be held responsible.’ Therefore, at her suggestion, the petitioner initialed the list of checks that he took at the end of the week, representing the total of the entries in cashbook No. 2. Miss Foster did not discuss with the petitioner the amount of his total receipts for the year, nor did she supply him with the amount of such total receipts from the records that she kept. The petitioners' income tax returns for the years in issue were prepared by the office of a certified public accountant in Boston. The accountant's office did not audit the petitioner's records; the returns were prepared on the basis of information submitted by the petitioner. In June 1962, the petitioners' tax return for 1960 was assigned to Revenue Agent Michael J. Finley for examination. Agent Finley went to the petitioner and requested to see his books and records; the petitioner referred him to the accounting firm. The accountant showed Agent Finley some canceled checks supporting certain expenses for which the petitioner had taken deductions; the revenue agent said that Page 217
he would also have to see the petitioner's books and records. In August 1962, Mr. Finley visited the petitioner's office to make such examination, pursuant to the advice of the accountant. The petitioner showed Mr. Finley a logbook containing voluminous information with respect to patients in both the Boston and Malden offices. Such information included one column which reported the payments made to the petitioner by the patients. The petitioner told Mr. Finley that he added the figures in the column, and used the total of such figures as the basis for preparation of his income tax returns. However, when Mr. Finley added up those figures, he found that they...