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In part I.B.(4), supra, we described our conclusion that
respondent proved by clear and convincing evidence that
petitioner and Betsy omitted $5,963.43 from income and that all
of this was due to petitioner’s fraud. In the notice of
deficiency, respondent determined that all the constructive
dividend omissions were due to petitioner’s fraud, but on brief
respondent took the position that only certain of the travel and
entertainment constructive dividends were fraudulently omitted.
Compare supra tables 12 and 15, and text following note 29. As
to $797.21 of miscellaneous Washington area expenses, we held
that respondent did not prove fraud by clear and convincing
evidence; however, petitioner has failed to carry his section
6653(b)(2) burden of proof as to these expenses. Accordingly, we
hold that the fraud additions to tax for 1986 apply to so much of
the underpayment as is attributable to $6,760.64 ($5,963.43 plus
$797.21) of constructive income dividend omissions.
We hold for respondent as to $6,760.64; we hold for
petitioner as to the remaining amount on this issue.
D. Negligence Additions--1986
Respondent determined in the alternative that, if petitioner
is not liable for part or all of the additions to tax for fraud
for 1986, then petitioner is liable for negligence additions to
tax under subparagraphs (A) and (B) of section 6653(a)(1).
Petitioner did not address this issue on brief. Because
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