John B. Mathers, Sr. - Page 14

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          distributions from the corporation for his benefit; that he knew            
          that these distributions were income to him; and that his failure           
          to file returns, to report the income, and to pay tax on that               
          income was due to fraud.  Therefore, respondent has established             
          these elements by clear and convincing evidence, and the                    
          additions to tax under section 6653(b)(1) for 1982, 1983, 1984,             
          and 1985 and under section 6653(b)(1)(A) and (B) for 1986 will be           
               It is not clear, however, that petitioner knew or should               
          have known that the payments withdrawn from the corporation by              
          his son would be taxable to him as constructive dividends.  With            
          respect to those amounts for 1982, 1983, 1984, and 1985,                    
          respondent has not satisfied her burden of proving that                     
          petitioner's failure to report the amounts paid for his son and             
          to pay tax on them was due to fraud.  Therefore, we do not                  
          sustain the 50 percent of the interest portion attributable to              
          those payments under section 6653(b)(2) for those years.  See               
          Franklin v. Commissioner, T.C. Memo. 1993-184.  On the other                
          hand, petitioner has not satisfied his burden of proving, for               
          1986, that the omissions with respect to distributions for the              
          benefit of his son were not due to fraud.  See sec. 6653(b)(2),             
          quoted above.                                                               
               Because we have upheld respondent's determination with                 
          respect to the additions to tax for fraud, we need not address              
          the alternative additions to tax for negligence and for failure             

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