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For 1983, 1984, and 1985, if any portion of a tax
underpayment is attributable to fraud, the addition to tax for
fraud under section 6653(b)(1) equals 50 percent of the total
underpayment of tax, and the increased interest under section
6653(b)(2) equals 50 percent of the interest payable under
section 6601 but only with respect to that portion of the
underpayment that is attributable to fraud.
For 1986, the addition to tax for fraud under section
6653(b)(1)(A) equals 75 percent of only that portion of a tax
underpayment that is attributable to fraud, and the increased
interest under section 6653(b)(1)(B) equals 50 percent of the
interest payable under section 6601 with respect to the portion
of the underpayment that is attributable to fraud. Sec.
6653(b)(1)(A) and (B).
Respondent has the burden of proof on the fraud addition to
tax. Sec. 7454(a); Rule 142(b). To satisfy this burden of
proof, respondent must prove by clear and convincing evidence
each of the following elements of tax fraud under section 6653:
(1) That the taxpayer underpaid taxes owed for each year; and
(2) that some part of the underpayment for each year is due to
fraud. King's Court Mobile Home Park, Inc. v. Commissioner, 98
T.C. 511, 515 (1992).
Fraud consists of an intentional wrongdoing for the purpose
of avoiding the payment of taxes known to be owed. Stoltzfus v.
United States, 398 F.2d 1002, 1004 (3d Cir. 1968); DiLeo v.
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