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1982 or fiscal 1982 that were attributable to fraud; respondent
carried this burden to the extent described in part I.C.
In this part of the opinion, petitioners have the burden of
proving by a preponderance of the evidence that respondent erred
in the notice of deficiency determinations as to matters of fact.
Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933).
A. Kenmore
We have set forth our findings as to the amounts of
Kenmore’s income for its fiscal 1981 and its fiscal 1982 supra in
tables 3, 4, and 7. The amounts of Kenmore’s omitted income for
these years are derived from adjustments that (1) increase
Kenmore’s gross receipts, and (2) increase Kenmore’s purchases.
We have held in part I.A. that respondent proved by clear
and convincing evidence that for fiscal 1981 and fiscal 1982
Kenmore’s taxable income was understated by the amounts set forth
supra in tables 3 and 4.
In our analysis as to fraud, we indicated our uncertainty as
to the matter of $6,600 per year of purchase-money mortgage
payments. Petitioners have failed to carry their burden of
proving that it is more likely than not that part of the deposits
to Kenmore’s Account consisted of these payments.
Accordingly we hold that, in computing Kenmore’s
deficiencies for its fiscal 1981 and 1982, the parties are to add
$6,600 to the amounts set forth supra in tables 3 and 4 as
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