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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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