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respectively, and both invoices listed petitioner's address as
Ave. Hidalgo, #407 in Toluca, Mexico.
Respondent determined the deficiencies in petitioner's
Federal income tax by using the source and application of funds
method.
OPINION
Respondent argues that the 1990 and 1991 transfers from
Mexico and the 1990 downpayment to Alamo Title were unreported
taxable income to petitioner from petitioner's business interests
in Mexico. Respondent also argues that petitioner underpaid his
taxes for both years due to fraud. Petitioner contends that the
transfers and downpayment were nontaxable loans from a Mexican
corporation and his family.
The penalty 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 the 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 an underpayment
for each year was due to fraud. Sec. 7454(a); Rule 142(b). 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 penalty
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