- 13 -
Fraud is never presumed. Beaver v. Commissioner, 55 T.C.
85, 92 (1970). Respondent cannot rely on petitioner's failure to
satisfy his burden of proof as to the underlying deficiency for
1966. Otsuki v. Commissioner, 53 T.C. 96, 106 (1969). Section
6653(b), as it read for 1966 and 1967, imposed an addition to tax
of 50 percent of the underpayment if any part of the underpayment
is due to fraud. To uphold imposition of this penalty,
respondent must prove by clear and convincing evidence two
elements: (1) the existence of an underpayment of tax each year,
and (2) that some part of the underpayment is due to fraud.
Hebrank v. Commissioner, 81 T.C. 640, 642 (1983).
Petitioner has admitted the existence of the car-sales
scheme which he says began in 1965. Petitioner has admitted that
he kept at least a portion of the proceeds from this scheme
during 1966 and 1967, the $40,000 he says he invested in the
Stables. These proceeds are unreported taxable income to
petitioner. Respondent, therefore, has established an
underpayment of tax for each year.
Fraud is an intentional wrongdoing. To establish fraud,
respondent must show that the taxpayer specifically intended to
evade a tax believed to be owing. Stoltzfus v. United States,
398 F.2d 1002, 1004 (3d Cir. 1968); Stephenson v. Commissioner,
79 T.C. 995, 1005 (1982), affd. 748 F.2d 331 (6th Cir. 1984).
Since intent can seldom be established by direct proof, it must
be gleaned from all the facts and circumstances in the entire
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011