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return; some part of the underpayment for each of these years was
due to Gleave’s fraud.
OPINION
Respondent contends that (1) petitioners underpaid their
taxes for 1980 through 1982, and (2) petitioners’ 1980 through
1982 underpayments are due to fraud and thus petitioners are
liable for the fraud additions to tax under section 6653(b).
Respondent also maintains that Kenmore is not permitted to deduct
any payments by Kenmore to or for the benefit of Gleave.
Petitioners contend that (1) they did not underpay their
taxes for 1980 through 1982, and (2) respondent has not met
respondent’s burden of proof on the fraud issue. Petitioners
maintain that (A) most of the checks drawn against Kenmore’s
Account, payable to cash are not income to Gleave, because they
were used to buy tanker loads of fuel, (B) the checks drawn
against Kenmore’s Account, used to pay for investments and
personal expenses of Gleave are not income to Gleave because they
were Kenmore’s repayment of a loan owed to Gleave, (C) checks
drawn against Kenmore’s Account to pay for investments made in
Gleave’s name were not income to Gleave, because the investments
were not Gleave’s but were Kenmore’s, and (D) much of the money
deposited into Kenmore’s Account belonged to others.
We agree in general with respondent.10
10 In the notice of deficiency to Gleave, respondent
determined that Gleave had income in the amounts that Kenmore
(continued...)
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