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6653(b)(1)(B) provides for additional interest on the portion of
the underpayment attributable to fraud.
Under section 6653(b)(1), applicable to 1984 and 1985, if
respondent proves that any part of the underpayment is attributable
to fraud, the addition to tax imposed by that section applies to
the entire underpayment, regardless of whether petitioners show
that some part of the underpayment is not attributable to fraud.
Sec. 6653(b)(1). Under section 6653(b)(1)(A) and (B), applicable
to 1986, if respondent establishes that any portion of an
underpayment is attributable to fraud, the entire underpayment is
to be treated as attributable to fraud, except with respect to any
portion of the underpayment that petitioners establish is not
attributable to fraud. Sec. 6653(b)(2).
Fraud is intentional wrongdoing on the part of the taxpayer
with the specific purpose to evade a tax believed to be owing.
McGee v. Commissioner, 61 T.C. 249, 256 (1973), affd. 519 F.2d 1121
(5th Cir. 1975). To support fraud, respondent has the burden of
proving, by clear and convincing evidence, that petitioners have an
underpayment for each year, and that some part of the underpayment
is due to fraud. Sec. 7454(a); Rule 142(b); Katz v. Commissioner,
90 T.C. 1130, 1143 (1988); Otsuki v Commissioner, 53 T.C. 96, 105
(1969). This burden is met if respondent shows that petitioners
intended to evade taxes known to be owing by conduct intended to
conceal income, mislead, or otherwise prevent the collection of
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