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1. Fraud
For tax year 1981, if any part of an underpayment is due to
fraud, section 6653(b) imposes an addition to tax of 50 percent
of the underpayment. For this purpose, the underpayment equals
the tax required to be shown on the return if a return is
delinquently filed. Sec. 6653(c)(1). For tax years 1982 to
1985, if any part of an underpayment is due to fraud, section
6653(b)(1) imposes the same addition to tax on the entire
underpayment, and section 6653(b)(2) imposes a further addition
of 50 percent of the interest payable under section 6601 with
respect to the portion of the underpayment attributable to fraud.
Respondent bears the burden of proving by clear and convincing
evidence that an underpayment exists and that part of such
underpayment is attributable to fraud. Sec. 7454(a); Rule
142(b); DiLeo v. Commissioner, 96 T.C. 858, 873 (1991), affd. on
other issues 959 F.2d 16 (2d Cir. 1992); Smith v. Commissioner,
91 T.C. 1049, 1053 n.3 (1988) (citing Rickard v. Commissioner, 15
B.T.A. 316, 317 (1929)), affd. 926 F.2d 1470 (6th Cir. 1991);
Stone v. Commissioner, 56 T.C. 213, 220-221 (1971). The
existence of fraud is a question of fact that we resolve
5(...continued)
attorney or "to whom it may concern". While the letters were
seemingly made by persons with personal knowledge, petitioners
have not provided the necessary foundation to ascertain that
fact. Because the letters possess no other, equivalent
circumstantial guarantees of trustworthiness, they cannot be
admitted into evidence under rule 803(24) of the Federal Rules of
Evidence.
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