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reconstruct petitioner's income. By applying the source and
application of funds method, respondent's agent concluded that
petitioner had income of $55,100 in 1988, $114,385 in 1989, and
$23,966 (as adjusted for respondent's concession) in 1990.
Respondent's determination is presumed to be correct, and
petitioner bears the burden of proving otherwise. Rule 142(a);
Welch v. Helvering, 290 U.S. 111, 115 (1933). Petitioner did not
do so. He did not contact the Court to explain why he did not
appear for trial. In his petition, petitioner contended that
respondent's method of reconstructing income was incorrect
because he had a cash hoard from Mexico before 1988. However,
there is no evidence that he had a cash hoard.
We sustain respondent’s determinations as to the
deficiencies for 1988, 1989, and 1990 (except as conceded by
respondent for 1990).
B. Fraud
Respondent determined that petitioner is liable for the
addition to tax for fraud under section 6653(b) for 1988 and the
fraud penalty under section 6663 for 1989 and 1990. A taxpayer
is liable for an addition to tax or penalty for fraud equal to 75
percent of the part of the underpayment that is due to fraud.
Secs. 6653(b), 6663(a). If the Commissioner shows that any part
of an underpayment is due to fraud, the entire underpayment is
treated as due to fraud unless the taxpayer proves that part of
the underpayment is not due to fraud. Secs. 6653(b)(2), 6663(b).
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