Chong-Kak and Sang-Ok Lee - Page 19

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               We have previously indicated that Hamalee is not entitled to           
          deduct a theft loss in 1989, and we see no purpose that would be            
          served by repeating our discussion here.  We hold that Hamalee              
          has not substantiated the claimed theft loss in 1989.  The same             
          is true with respect to the claimed cash expenditures.  Suffice             
          it to say, once again, that petitioners have not proven that                
          Hamalee is entitled to any of them.  We hold that the Lees may              
          not carryback any of the purported 1989 NOL.                                
          5.  Additions to Tax For Fraud                                              
               Turning to respondent's allegations of fraud, respondent               
          must meet her burden of proving fraud through affirmative                   
          evidence because fraud is never imputed or presumed.  Beaver v.             
          Commissioner, 55 T.C. 85, 92 (1970).  Whether fraud exists in a             
          given situation is a factual determination that must be made                
          after reviewing the particular facts and circumstances of the               
          case.  DiLeo v. Commissioner, 96 T.C. 858, 874 (1991), affd.                
          959 F.2d 16 (2d Cir. 1992).  Respondent must prove both prongs of           
          the often-cited two-prong test for fraud (i.e., whether                     
          petitioners underpaid tax in the relevant year, and whether some            
          part of the underpayment was due to fraud), in order to sustain             
          her allegations under:  (1) Section 6653(b)(1) for petitioners'             

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