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Here, too, petitioner must include in income those amounts that
FBI paid for the personal benefit of Mathers, Jr.
Fraud
The addition to tax in the case of fraud is a civil sanction
provided primarily as a safeguard for the protection of the
revenue and to reimburse the Government for the heavy expense of
investigation and the loss resulting from the taxpayer's fraud.
Helvering v. Mitchell, 303 U.S. 391, 401 (1938). For 1982, 1983,
1984, and 1985, section 6653(b)(1) provides for an addition to
tax equal to 50 percent of the entire underpayment when any part
of an underpayment is due to fraud, and section 6653(b)(2)
provides for an addition to tax equal to 50 percent of the
interest payable under section 6601 for that portion of the
underpayment that is attributable to fraud. For 1986, section
6653(b)(1)(A) provides for an addition to tax equal to 75 percent
of the underpayment attributable to fraud, and section
6653(b)(1)(B) provides for an addition to tax equal to 50 percent
of the interest payable under section 6601 for that portion that
is attributable to fraud.
Respondent has the burden of proving, by clear and
convincing evidence, that some part of an underpayment for each
year was due to fraud. Sec. 7454(a); Rule 142(b). For 1982,
1983, 1984, and 1985, respondent must prove the specific portion
of the underpayment of tax attributable to fraud for purposes of
section 6653(b)(2). For 1986, section 6653(b)(2), provides:
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Last modified: May 25, 2011