- 20 -
has not proven that petitioner was more than a mere conduit for
someone else or that he ever received any of the funds at issue
and used them for personal purposes. Nor has respondent
proffered persuasive third-party testimony, as she did in Beasley
v. Commissioner, supra, linking petitioner with the receipt and
use of the diverted corporate funds. Respondent's evidence in
this case, unlike that in Beasley, does not clearly and
convincingly prove embezzlement income. Cf. Roberts v.
Commissioner, T.C Memo. 1993-98 (finding fraud from embezzlement
income where taxpayer used corporate funds to build and improve
personal residences); Hobson v. Commissioner, T.C. Memo. 1992-312
(finding embezzlement income where funds were diverted into
taxpayer's own bank accounts); Davis v. Commissioner, T.C. Memo.
1991-333 (finding embezzlement income where taxpayer used
diverted funds to buy horse for daughter, cars for self and
family, and contributed remaining funds to family owned
corporation).
We need not reach the question of fraudulent intent for 1983
with respect to the unconceded items because respondent has
failed to prove an underpayment for 1983 with respect to any of
those items. Ishijima v. Commissioner, T.C. Memo. 1994-353. We
therefore reject respondent's determination of section 6653(b)(2)
additions for 1983, except with respect to the underpayment
arising from petitioner's concession that he received unreported
income during that year. See supra p. 2.
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