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extension only until October 15, 1993. Petitioners have offered
no evidence that they were granted any further extension of time.
Since no explanation for the lateness of their filing was
offered, we hold that petitioners have not proved that their
failure to timely file was due to reasonable cause rather than
willful neglect. Accordingly, we sustain respondent on this
issue.
The fourth issue for decision is whether petitioners are
liable for the section 6663(a) penalty for fraud for each of the
years in issue. Respondent determined that petitioners were
liable for the fraud penalty for underpayments attributable to
disallowed deductions for household-related business expenses.
Section 6663(b) provides that if respondent establishes that
any part of any underpayment of tax required to be shown on a
return is due to fraud the entire underpayment shall be treated
as attributable to fraud and subjected to a 75 percent penalty
unless the taxpayer establishes, by the preponderance of the
evidence, that some part of the underpayment is not attributable
to fraud.5 Respondent must establish by clear and convincing
evidence: (1) An underpayment of tax by the taxpayer, and (2)
that some part of the underpayment is due to fraud. Section
5 We note that in the notice of deficiency respondent
determined that only the portion of each underpayment resulting
from the disallowed household expenses is attributable to fraud.
Therefore we need consider the fraud issue only with regard to
that portion of each underpayment.
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