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underpayment. Sec. 6653(b). In addition, there is added to the
tax 50 percent of the interest due on the portion of the
underpayment attributable to fraud. Sec. 6653(b)(2). In the
case of joint returns, assessing the addition to tax for fraud
against both taxpayers requires participation of both the husband
and wife in the fraud. Sec. 6653(b)(4).
The Commissioner has the burden of proving fraud by clear
and convincing evidence. Sec. 7454(a); Rule 142(b); Parks v.
Commissioner, 94 T.C. 654, 660 (1990). First, the Commissioner
must prove that there is an underpayment. Parks v. Commissioner,
supra. The Commissioner may not rely on the taxpayer's failure
to carry the burden of proving the underlying deficiency. Id. at
660-661. Second, the Commissioner must show that the taxpayer
intended to evade taxes by conduct intended to conceal, mislead,
or otherwise prevent tax collection. Stoltzfus v. United States,
398 F.2d 1002, 1004 (3d Cir. 1968); Parks v. Commissioner, supra
at 661; Rowlee v. Commissioner, 80 T.C. 1111, 1123 (1983).
Underpayment
The Commissioner may prove that the taxpayer underpaid tax
by proving that the taxpayer had a likely source of the
unreported income, Holland v. United States, 348 U.S. 121 (1954);
Parks v. Commissioner, supra; Nicholas v. Commissioner, 70 T.C.
1057 (1978), or, where the taxpayer alleges a nontaxable source,
by disproving the alleged nontaxable source; United States v.
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