Larry Jackson Beard and Gloria Dean Beard - Page 14

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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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