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Petitioners bear the burden of proving that they are not liable
for self-employment taxes under section 1401. Rule 142(a).
Petitioners have not met their burden on this issue.
Accordingly, their unreported income for the years in issue is
subject to self-employment tax.
Issue 4. Fraud
Respondent determined that petitioners are liable for the
fraud penalty pursuant to section 6663 for the years in issue.
Petitioners assert that they are not liable for the penalty.
The existence of fraud is an issue of fact to be determined
from a consideration of the entire record. Stratton v.
Commissioner, 54 T.C. 255, 284 (1970); Otsuki v. Commissioner, 53
T.C. 96, 105-106 (1969). Respondent has the burden of proving
fraud and must affirmatively establish its existence by clear and
convincing evidence. Sec. 7454(a); Rule 142(b); Stone v.
Commissioner, 56 T.C. 213, 220 (1971); Beaver v. Commissioner, 55
T.C. 85, 92 (1970). Fraud means actual, intentional wrongdoing,
and the intent required is the specific purpose to evade a tax
believed to be owing. Candela v. United States, 635 F.2d 1272
(7th Cir. 1980); Stoltzfus v. United States, 398 F.2d 1002, 1004
(3d Cir. 1968); Mitchell v. Commissioner, 118 F.2d 308 (5th Cir.
1941), revg. 40 B.T.A. 424 (1939); Wilson v. Commissioner, 76
T.C. 623, 634 (1981), supplemented by 77 T.C. 324 (1981). The
Commissioner must show that the taxpayer intended to evade taxes
by conduct calculated to conceal, mislead, or otherwise prevent
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