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1983. As with the receipts, one-half of the expenses for each
year are allocated to each petitioner.
Interest Income
Petitioners argue that because no tax is otherwise owed and
thus no returns are required, the matter of interest income is
immaterial. Petitioners have presented no other arguments as to
why the interest is not included in gross income under section
61(a)(4). The record generally supports respondent's
determinations of the amounts of interest income received during
the years at issue.7 Although the underlying bank accounts were
in Mrs. Miravalle's name, because the funds deposited therein
were the proceeds of petitioners' business, we find that, as with
the business income, petitioners share the interest income.
Thus, we allocated one-half to each petitioner.
Additions to Tax For Fraud
For the years at issue, section 6653(b) imposes an addition
to tax of 50 percent of the underpayment of tax if any part of
the underpayment is due to fraud, plus an amount equal to 50
percent of the interest on the portion of the underpayment
attributable to fraud. Respondent has the burden of proving
fraud by clear and convincing evidence. Sec. 7454(a); Rule 142;
7 Petitioners' bank statements establish $2,663.96 of the
$2,927.00 which respondent has determined in interest income for
1983. The difference appears to be the Dec. 1983 interest on the
Atlantic Natl. money market account, which monthly statement is
not in the record.
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