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spouse, the Commissioner must prove that some part of the
underpayment of tax is due to the fraud of that spouse. Hicks Co.
v. Commissioner, 56 T.C. 982, 1030 (1971), affd. 470 F.2d 87 (1st
Cir. 1972); Stone v. Commissioner, 56 T.C. 213, 227-228 (1971); see
sec. 6653(b)(3). We shall first consider whether Mrs. Marzullo is
liable for the fraud additions for any of the years under
consideration.
Mrs. Marzullo did not sign the 1986 or 1987 tax return.
Moreover, she testified that she did not review petitioners' tax
returns and did not know about the omitted income. Respondent
contends that Mrs. Marzullo is liable for fraud because her
testimony was not credible. Respondent's burden of proof,
however, cannot be satisfied simply by attacking Mrs. Marzullo's
credibility. There is no evidence in the record proving that Mrs.
Marzullo actually knew that income from MPM had been underreported.
Further, there is no evidence in the record proving that Mrs.
Marzullo knew of the omission of her husband's income from the
College. We therefore hold that Mrs. Marzullo is not liable for
the additions to tax for fraud for any of the years under
consideration.
We now consider whether Mr. Marzullo is liable for the fraud
addition for 1986. Petitioners argue that Mr. Marzullo should not
be liable for the fraud addition for 1986, contending that he did
not abuse the accounts payable account at the College in 1986, in
contrast to his use of the account in 1987 and 1988. Respondent
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