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I. Fraud
When respondent seeks to impose the addition to tax under
section 6653(b),11 respondent has the burden of proof. To carry
10(...continued)
paid to Gleave or for Gleave’s benefit. Respondent also
determined that Gleave is liable for self-employment taxes for
each of the years in issue. On brief, respondent refers to this
income as being entirely dividend income. Petitioners’
contentions do not include any challenge to respondent’s implicit
self-employment income determinations in the notice of
deficiency, nor to issues such as Kenmore’s earnings and profits
that would be relevant to a dividend characterization. See,
e.g., Hagaman v Commissioner, 958 F.2d 684, 692, 695 (6th Cir.
1992), affg. and remanding T.C. Memo. 1987-549; DiLeo v.
Commissioner 96 T.C. 858, 888-889 (1991), affd. 959 F.2d 16 (2d
Cir. 1992). Also the parties do not discuss whether any portion
of these amounts should be treated as employee compensation for
Gleave’s personal services, which could affect both Gleave’s and
Kenmore’s tax liabilities. In the circumstances of the instant
cases, we limit ourselves on this matter to what is disputed by
the parties. E.g., George R. Holswade, M.D., P.C. v.
Commissioner, 82 T.C. 686, 698 (1984); Estate of Fusz v.
Commissioner, 46 T.C. 214, 215 n.2 (1966).
11 Sec. 6653(b) provides, in pertinent part, as follows:
SEC. 6653. FAILURE TO PAY TAX.
* * * * * * *
(b) Fraud.--
(1) In general.--If any part of any underpayment
(as defined in subsection (c)) of tax required to be
shown on a return is due to fraud, there shall be added
to the tax an amount equal to 50 percent of the
underpayment.
(2) Additional amount for portion attributable to
fraud.--There shall be added to the tax (in addition to
the amount determined under paragraph (1)) an amount
equal to 50 percent of the interest payable under
section 6601--
(A) with respect to the portion of the
underpayment described in paragraph (1) which is
(continued...)
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