Kim Beauchamp - Page 18

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          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).  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 Commissioner has the burden of proving fraud by clear              
          and convincing evidence.  Sec. 7454(a); Rule 142(b).  To satisfy            
          his burden of proof, the Commissioner must show:  (1) An                    
          underpayment exists; and (2) the taxpayer intended to evade taxes           
          known to be owing by conduct intended to conceal, mislead, or               
          otherwise prevent the collection of taxes.  See Parks v.                    
          Commissioner, 94 T.C. 654, 660-661 (1990).  The Commissioner must           
          meet this burden through affirmative evidence because fraud is              
          never imputed or presumed.  Beaver v. Commissioner, 55 T.C. 85,             
          92 (1970).                                                                  
               A.  Underpayment of Tax                                                
               Petitioner conceded that he underreported income for 1989              
          and 1990.  We are satisfied that the Commissioner has established           
          by clear and convincing evidence an underpayment of tax by                  
          petitioner for each of the years in issue.                                  
               B.  Fraudulent Intent                                                  
               The Commissioner must also prove that a portion of the                 
          underpayment was due to fraud.  Professional Servs. v.                      



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