Richard K. and Christine M. McGirl - Page 26

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          tax returns; petitioners have failed to prove the Yogurt                    
          Station's entitlement to additional deductions for unclaimed                
          business expenses.  Accordingly, we sustain respondent's                    
          determination of the deficiencies for 1989, 1990, and 1991.                 
          4.  Civil Fraud Penalty                                                     
               The addition to tax in the case of fraud is a civil sanction           
          provided primarily as a safeguard for the protection of the                 
          revenue and to reimburse the Government for the heavy expense of            
          investigation and the loss resulting from a taxpayer's fraud.               
          Helvering v. Mitchell, 303 U.S. 391, 401 (1938).  Respondent has            
          the burden of proving, by clear and convincing evidence, an                 
          underpayment for each year and that some part of the underpayment           
          was due to fraud.  Sec. 7454(a); Rule 142(b); Katz v.                       
          Commissioner, 90 T.C. 1130, 1143 (1988); Otsuki v. Commissioner,            
          53 T.C. 96, 105 (1969).  If respondent establishes that any                 
          portion of the underpayment is attributable to fraud, the entire            
          underpayment is treated as attributable to fraud and subjected to           
          a 75-percent addition to tax or penalty, except with respect to             
          any portion of the underpayment that the taxpayer establishes is            
          not attributable to fraud.  Sec. 6663(b).                                   
               Fraud is intentional wrongdoing on the part of the taxpayer            
          with the specific purpose to evade a tax believed to be owing.              
          McGee v. Commissioner, 61 T.C. 249, 256 (1973), affd. 519 F.2d              
          1121 (5th Cir. 1975).  The existence of fraud is a question of              
          fact to be resolved from the entire record.  Gajewski v.                    




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