- 35 -
For 1987, section 6653(b)(1)(A) imposes an addition to tax
equal to 75 percent of the portion of an underpayment that is
attributable to fraud and section 6653(b)(1)(B) imposes an
addition to tax equal to 50 percent of the interest due on that
portion of the underpayment. Section 6653(b)(1) for 1988 and
section 6663(a) for 1989 and 1990 impose an addition to tax and a
penalty, respectively, equal to 75 percent of the portion of an
underpayment that is attributable to fraud. For purposes of the
foregoing provisions, section 6653(b)(2) for 1987 and 1988 and
section 6663(b) for 1989 and 1990 provide that if respondent
establishes that any portion of an underpayment is due to fraud,
the entire underpayment is treated as attributable to fraud,
unless the taxpayer proves that some portion of the underpayment
is not due to fraud.
In order for the additions to tax and penalties for fraud to
apply, respondent must prove by clear and convincing evidence
that an underpayment exists and that some portion of such under-
29(...continued)
Katerelos is not liable for any additions to tax or penalties for
fraud for any of the years 1987 through 1990, respondent has not
carried her burden of proving fraud. That respondent concedes
that Ms. Katerelos is not liable for fraud does not relieve Mr.
Katerelos from the additions to tax or penalties for fraud. That
petitioners filed a joint return is not a defense to the imposi-
tion of such additions and penalties against only one spouse.
See, e.g., Otsuki v. Commissioner, 53 T.C. 96, 112-113 (1969).
Even the case cited by petitioners as authority for the proposi-
tion that fraud cannot be imputed from one spouse to another
imposed the penalty for fraud against one spouse even though
respondent failed to prove fraud against the other spouse. See
Fry v. Commissioner, T.C. Memo. 1991-51, affd. without published
opinion 8 F.3d 26 (9th Cir. 1993).
Page: Previous 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 NextLast modified: May 25, 2011