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She knew that petitioner had traveled to Bermuda on business, she
accompanied him on at least one occasion, and she knew that he
met with Mr. Quin during that trip. She entertained petitioner's
business associates at functions in their home.
Mrs. Fields signed a residential loan application stating
that petitioners had a beneficial interest in Atlantis worth
$300,000. Her children attended a private school in Rye, New
York, in 1980 and 1981, and she knew that tuition cost about
$7,000 a year for each child. Petitioners purchased a $16,735
boat in 1981.
Mrs. Fields generally did not question petitioner about
their finances. She relied on him and Mr. Schiller to prepare
their income tax returns correctly, and she did not question the
numbers on the returns. Mrs. Fields did not ask petitioner if
she could review their tax returns. She knew that petitioner
would have let her review their returns if she asked.
OPINION
Except with respect to respondent's allegations of fraud,
petitioners must prove that respondent's determinations set forth
in the notice of deficiency are incorrect. Rule 142(a) and (b);
Welch v. Helvering, 290 U.S. 111, 115 (1933). Respondent must
prove by clear and convincing evidence that petitioner is liable
for the additions to tax for fraud. Sec. 7454(a); Rule 142(b).
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