J.J. Zand - Page 194

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          This tentative and qualified reaction by the trial Judge was made           
          before a review of all the testimony and massive documentary                
          evidence and before any briefs were filed.29                                
               We are not bound by the comments made by the trial Judge               
          about the fraud issue.  They were of a preliminary or tentative             
          nature, and were not embodied in a ruling.  In our view the                 
          totality of the clear and convincing evidence contained in this             
          record establishes that petitioner's underpayment of tax for each           
          of the years 1972 through 1976 was due to fraud with intent to              
          evade tax.  In the trial Judge's qualified reaction there was no            
          analysis of the indicia of fraud present in this record.  By                
          contrast, our conclusion regarding the section 6653(b) additions            
          to tax is based on consideration of the indicia of fraud                    
          discussed below.                                                            
               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 the taxpayer's fraud.             
          Helvering v. Mitchell, 303 U.S. 391, 401 (1938).  The                       
          Commissioner bears the burden of proof with respect to the                  
          additions to tax for fraud, and that burden must be carried by              

          29  Compare North American Rayon Corp. v. Commissioner, 12 F.3d 583, 586    
          & n. 4 (6th Cir. 1993), affg. T.C. Memo. 1992-610, where the trial Judge wrote
          a letter to counsel indicating that the Court was inclined to rule in favor of
          the taxpayer, but in a subsequent opinion decided against the taxpayer.  The
          Court of Appeals affirmed the decision.  See also Milbrew, Inc. v.          
          Commissioner, 710 F.2d 1302, 1308 (7th Cir. 1983), affg. T.C. Memo. 1981-610.




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