Stephen P. and Sharon L. Sherwood - Page 6

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               The third and fourth issues for decision are whether                   
          petitioners are liable for the section 6651(f) addition to tax              
          for 1992 and 1993.  Respondent determined in the alternative that           
          the section 6651(a)(1) addition to tax would apply in the event             
          it was decided that the failure to file was not fraudulent.  As             
          noted infra, respondent bears the burden of proving fraud issues            
          by clear and convincing evidence.  Section 7454(a); Rule 142(b).            
               Section 6651(f) provides that the section 6651(a)(1)                   
          addition to tax shall be increased to 15 percent of the tax                 
          required to be shown on the return for each month or fraction               
          thereof for which there is a failure to file a return, up to 75             
          percent in the aggregate, where such failure to file is                     
          fraudulent.                                                                 
               It would be repetitive to discuss the reasons why we are               
          unconvinced that petitioners acted fraudulently in failing to               
          file their 1992 and 1993 returns as the reasons enumerated infra            
          in regard to the 1991 fraud penalty are similarly relevant for              
          these taxable years.  However, we must still address respondent's           
          alternative determination that petitioners are liable for the               
          section 6651(a)(1) addition to tax for 1992 and 1993.                       
               Irrespective of the fact that respondent has taken an                  
          inconsistent position with regard to petitioners' Forms 1040-NR,2           

          2         For 1991, respondent accepted petitioners' Forms 1040-            
          NR as a filing of a return.  However, for 1992 and 1993,                    
          respondent determined that these Forms 1040-NR did not constitute           
          a filing.                                                                   




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