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For 1986 and 1987, the addition to tax for fraud under section
6653(b)(1)(A) is 75 percent of the part of a tax underpayment
that is due to fraud, and the addition to tax under section
6653(b)(1)(B) is 50 percent of the interest payable under section
6601 with respect to that part of the underpayment that is due to
fraud.
Respondent has the burden of proving by clear and convincing
evidence that Mr. and Mrs. Reaves fraudulently underpaid tax.
Sec. 7454(a); Rule 142(b); Stoltzfus v. United States, 398 F.2d
1002, 1004 (3d Cir. 1968). Fraud cannot be imputed from one
spouse to another. Secs. 6653(b)(4) (for 1984 and 1985) and
6653(b)(3) (for 1986 and 1987). Thus, respondent must prove that
each spouse committed fraud. 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).
2. Underpayment
Mr. and Mrs. Reaves concede that they underpaid tax in 1984,
1985, 1986, and 1987.
3. Fraudulent Intent
Respondent must prove by clear and convincing evidence that
Mr. and Mrs. Reaves had fraudulent intent. Parks v.
Commissioner, 94 T.C. 654, 664 (1990). For purposes of section
6653(b), fraud is actual, intentional wrongdoing, Mitchell v.
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