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throughout these proceedings that they have no tax liability for
the years at issue because their business made no profit during
these years. Where respondent has established unreported income
and the taxpayer claims that there are offsetting deductions, the
taxpayer has the burden to come forward with evidence as to the
claimed deductions, in which event the burden of proof to
disprove the deductions then rests with respondent. See id. and
the cases discussed therein. Petitioners have not produced any
evidence of deductions in excess of the amounts allowed by
respondent, as previously increased. See supra pp. 12-13.
A comparison of the receipts and expenses for 1982 clearly
establishes an amount of business and interest income which would
require the filing of a tax return. Accordingly, we find that
respondent has established some underpayment of tax for 1982.
For 1983, respondent has not addressed the deductibility of
the $106,659.95 paid from the Indian Rocks account. Nonetheless,
even if all $106,659.95 were deductible, petitioners still would
have net business income in 1983, plus interest income. Thus, we
find that respondent has established some underpayment of tax for
1983.
To establish fraud, respondent must show that the taxpayer
intended to evade a tax believed to be owing by conduct intended
to conceal, mislead, or otherwise prevent the collection of such
tax. Korecky v. Commissioner, supra; DiLeo v. Commissioner,
supra; Parks v. Commissioner, 94 T.C. at 660-661. Fraud is never
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