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petitioner created or participated in numerous entities, bank
accounts, transactions among purported partners and shareholders,
and other purported arrangements (such as loans, leases, flow-
throughs), many of which were fictitious, creating layers of
complexity which appear to have served little or no function
other than an attempt to deceive respondent. Indeed, the web
woven by petitioner is so tangled as to be virtually
impenetrable.
Additions for Fraud
Respondent determined in the notice of deficiency that
petitioner is liable for the additions to tax for fraud under
section 6653(b)(1)(A) and (B) for 1987 and section 6653(b) for
1988. Respondent bears the burden of proof and must establish
each element of fraud by clear and convincing evidence. Sec.
7454(a); Rule 142(b); Akland v. Commissioner, 767 F.2d 618, 621
(9th Cir. 1985), affg. T.C. Memo. 1983-249; Toussaint v.
Commissioner, 743 F.2d 309, 312 (5th Cir. 1984), affg. T.C. Memo.
1984-25; Wright v. Commissioner, 84 T.C. 636, 639 (1985).
Respondent must prove fraud in each of the years involved.
Drieborg v. Commissioner, 225 F.2d 216, 220 (6th Cir. 1955),
affg. in part and revg. in part a Memorandum Opinion of this
Court dated Feb. 24, 1954.
Respondent must prove by clear and convincing evidence that:
(1) An underpayment of tax exists for each of the years in issue,
and (2) that some part of the underpayment is due to fraud. Sec.
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