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section 6601 and applies only to the portion of the underpayment
that is attributable to fraud. Respondent has the burden of
proving, by clear and convincing evidence, what portion of the
deficiency is attributable to fraud.34
Our analysis in part I., supra, leads us to conclude that
respondent proved by clear and convincing evidence that the
unreported amount for 1985 (supra table 19) was omitted from
petitioner’s and Betsy’s joint tax return due to petitioner’s
fraud.
We hold for respondent on this issue with respect to the
indicated amount for 1985. (The payment described supra in note
30, shall be taken into account in determining the amount of this
addition to tax.) We hold for petitioner on this issue with
respect to the remaining amount for 1985.
C. Fraud Additions--1986
In order to impose the fraud 75-percent addition to tax or
the additional addition to tax for 1986 under paragraph (1) of
section 6653(b),35 respondent must prove, by clear and convincing
34 The 1986 amendments include a provision under which the
burden of proof shifts to the taxpayer. See sec. 6653(b)(2), set
forth infra in note 35. The statute applicable to 1985 (set
forth supra in note 33) does not have any such provision, and so
the general fraud burden-of-proof rules of sec. 7454(a) (supra
note 24) apply for 1985.
35 Sec. 6653 for 1986 provides, in pertinent part, as
follows:
(continued...)
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