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liable for the addition to tax for fraud under section 6653(b)(1)
for the year 1983 only.
For purposes of the section 6653(b)(2) addition to tax,
respondent must prove those portions of the underpayments that
are due to fraud. We find that the underpayment of tax on
petitioners' business income for 1983 is attributable to fraud.
However, the reason petitioners are not entitled to deduct the
1983 payments from the Indian Rocks accounts beyond the
$29,469.37 discussed supra, is because of the lack of evidence
from which to determine business purpose. Petitioners' failure
to meet the burden of proof is insufficient to establish fraud as
to this amount. Thus, for the purposes of the addition under
section 6653(b)(2) only, petitioners' business income for 1983
should be offset by the remaining $77,190.58 ($106,659.95 less
$29,469.37). Cf. Van Vorst v. Commissioner, T.C. Memo. 1993-353.
With respect to petitioners' unreported interest income, we
conclude that respondent has not provided sufficient evidence to
conclude that the addition to tax under section 6653(b)(2) should
attach.
Addition to Tax under Section 6654
Section 6654 imposes an addition to tax for failure to pay
estimated tax. Petitioners' only argument which respect to this
addition to tax for 19838 is that, since there is no underlying
8 Respondent did not seek this addition to tax for 1982.
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