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others to commit the crime of aiding and assisting in the
preparation of false returns of others; the conviction under
section 7206(1) might have been with respect to unreported income
from movie deals, which respondent has conceded petitioner did
not have; further, the convictions under section 7206(1) and (2)
could be based on nothing more than petitioner's participation in
the conspiracy, under Pinkerton v. United States, 328 U.S. 640,
645-647 (1946).
Respondent determined that petitioner was liable for an
addition to tax for fraud for 1975 under section 6653(b). This
section imposes an addition to tax equal to 50 percent of any
underpayment in tax if any part of the underpayment is due to
fraud. To establish this, respondent must show both: (1) That
the taxpayer has underpaid his taxes for the year in question
(existence of underpayment), and (2) that some part of the
underpayment is due to fraud (fraudulent intent, intent to evade
tax). DiLeo v. Commissioner, 96 T.C. 858, 873 (1991), affd. on
other issues 959 F.2d 16 (2d Cir. 1992); Parks v. Commissioner,
94 T.C. 654, 660-661 (1990); Truesdell v. Commissioner, 89 T.C.
1280, 1301 (1987); Hebrank v. Commissioner, 81 T.C. 640, 642
(1983). Respondent bears the burden of proving fraud and must
carry this burden for each element of fraud by clear and
convincing evidence. Sec. 7454(a); Rule 142(b); DiLeo v.
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