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Paragraph 35. The petitioner understated her income tax
liability (including self-employment tax) for the taxable
years 1987 and 1988 in the amounts of $3,333 and $5,844,
respectively.
Paragraph 41. There was a substantial understatement of
income tax by petitioner for 1988, and petitioner did not
have a reasonable basis or good faith claim in making such
an understatement.
We find that petitioner's understatement is not "substantial"
within the meaning of section 6661(b)(1)(A) for taxable year
1987; however, it is "substantial" for taxable year 1988.
Section 6661(b)(2)(B) provides that any substantial
understatement can be reduced by the portion for which there was
substantial authority or adequate disclosure on the tax return.
Petitioner has not shown substantial authority supporting the
understatements. In addition, the tax returns did not contain
any disclosure of petitioner's tax position.
Based on the facts deemed admitted, we hold that petitioner
is not liable for the addition to tax under section 6661 for the
taxable year 1987; however, she is liable for the addition to tax
for taxable year 1988.
Issue 3. Fraud
The final issue is whether we should sustain respondent's
determinations of the additions to petitioner's income tax for
fraud. Respondent bears the burden of proving petitioner's fraud
for each year by clear and convincing evidence. Sec. 7454(a);
Rule 142(b). When respondent determines fraud for each of
several years, respondent's burden applies separately for each
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