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memberships, expensive vacation), and she admitted such at trial.
See Berman v. Commissioner, T.C. Memo. 1993-629, affd. without
published opinion 47 F.3d 1158 (2d Cir. 1995); Ewell v.
Commissioner, T.C. Memo. 1988-265; sec. 1.6013-5(b), Income Tax
Regs. She enjoyed a good life that went well beyond normal
support. See Terzian v. Commissioner, 72 T.C. 1164, 1172 (1979).
Issue 3. Fraud Additions to Tax and Penalty for 1986-89
The third issue for decision is whether Mrs. Zaban is liable
for fraud. Respondent determined fraud additions to tax against
Mrs. Zaban for 1986 and 1987 pursuant to section 6653(b)(1)(A) and
(B) and for 1988 pursuant to section 6653(b)(1) and a penalty for
1989 pursuant to section 6663.6 Mrs. Zaban asserts that she lacked
any actual knowledge of the unreported income items not reported in
the returns for 1986 through 1989.
The Commissioner has the burden of proving fraud by clear and
convincing evidence. Sec. 7454(a); Rule 142(b). To establish
fraud, the Commissioner must show that the taxpayer intended to
evade taxes known to be owing by conduct intended to conceal,
6 For 1986 and 1987, sec. 6653(b)(1)(A) imposed an
addition to tax equal to 75 percent of the portion of the
underpayment attributable to fraud, and sec. 6653(b)(1)(B)
imposed an addition to tax equal to 50 percent of the interest
payable under sec. 6601 with respect to that portion of the
underpayment.
For 1988 and 1989, sec. 6653(b)(1) and sec. 6663,
respectively, imposed additions to tax and penalties consisting
of 75 percent of the portion of the underpayment attributable to
fraud.
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