Ted W. Gleave - Page 68

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          (1) Kenmore                                                                 
               In part I.A. of this opinion, we considered the parties’               
          disputes as to the amounts of Kenmore’s income in order to                  
          determine whether respondent proved by clear and convincing                 
          evidence that Kenmore has an underpayment of tax.  After                    
          examining the evidence in the record, we concluded that                     
          respondent carried this burden of proof for each of the years in            
          issue.  This conclusion applies also to our consideration of the            
          additional addition to tax under section 6653(b)(2) for Kenmore’s           
          fiscal 1982.                                                                
               In particular, we conclude that respondent has proven by               
          clear and convincing evidence that (consistent with our holding             
          supra in part I.A.) Kenmore omitted from taxable income                     
          $345,556.67 for its fiscal 1982 (supra table 4), and that the               
          underpayment of tax resulting from this omission is attributable            
          to fraud.                                                                   
               We hold for respondent as to the amount of underpayment                
          resulting from this omission; we hold for petitioner as to any              
          other amount of underpayment for 1982.                                      


               19(...continued)                                                       
                    except with respect to any portion of the underpayment            
                    which the taxpayer establishes is not attributable to             
                    fraud.                                                            
               This amendment placed the burden of proof on the taxpayer to           
          establish that a portion of the deficiency was not attributable             
          to fraud.  The amendment applies to tax returns the due date of             
          which is after Dec. 31, 1986, and so does not affect the instant            
          cases.                                                                      




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