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there is no underpayment of tax as defined by section
6664(a).
Section 6663(a) provides that if any part of an
underpayment is due to fraud, there shall be added to
the tax an amount equal to 75 percent of the portion of
the underpayment which is attributable to fraud. The
Commissioner bears the burden of proving fraud by clear
and convincing evidence. Sec. 7454(a); Rule 142(b).
If the Commissioner establishes that any portion of an
underpayment is attributable to fraud, then the entire
underpayment shall be treated as attributable to fraud,
except as to any portion of the underpayment which the
taxpayer establishes, by a preponderance of the evidence,
is not attributable to fraud. Sec. 6663(b).
In this case, we construe respondent's statements at
trial and in her post-trial briefs to concede that the only
portion of the underpayment attributable to fraud is the
portion attributable to the omission of $127,889, as
determined in the notice of deficiency. Accordingly, we
limit our discussion of the fraud penalty to the omission
of income in the amount of $127,889.
To prove fraud, the Commissioner must show that an
underpayment exists, and that the taxpayer intended to
evade taxes known to be owing by conduct intended to
conceal, mislead, or otherwise prevent the collection of
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