- 13 - sensitive addition of section 6653(b)(2) is imposed only on the portion of the deficiency shown by respondent to be due to fraud. Therefore, petitioner is collaterally estopped from denying the interest-sensitive fraud addition only with respect to the portion of the 1983 deficiency attributable to items that he admitted in his guilty plea in the criminal trial and conceded in this case. For any remaining portion of the deficiency, respondent must prove: (1) That there is an underpayment of tax and (2) what part of the underpayment is due to fraud. Sec. 7454(a); Rule 142(b); DiLeo v. Commissioner, supra at 873; Stone v. Commissioner, supra.4 In order to prove an underpayment, the Commissioner cannot rely on the presumption of correctness of the statutory notice for deficiency purposes. See DiLeo v. Commissioner, supra at 873. Fraud is never presumed; even if a taxpayer's testimony is incredible, we may still be left with no more than a suspicion of fraud. Rinehart v. Commissioner, T.C. Memo. 1983-184. Suspicion, even a strong suspicion, of fraud will not sustain the Commissioner's determination.5 See Drieborg v. Commissioner, 225 4 The Court of Appeals for the Third Circuit has stated that evidence must be so "'clear, direct, weighty and convincing as to enable the * * * [fact finder] to come to a clear conviction, without hesitancy, of the truth of the precise facts in issue'". United States Fire Ins. Co. v. Royal Ins. Co., 759 F.2d 306, 309 (3d Cir. 1985), quoting In re Estate of Fickert, 337 A.2d 592, 594 (Pa. 1975). 5 See Balter, Tax Fraud and Evasion, par. 8.03[9][a], at 8- 71 (1983 & 1994 Supp.).Page: Previous 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Next
Last modified: May 25, 2011