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taxpayer may be held liable for the fraud penalty: The
Commissioner must prove an underpayment of tax, and the
Commissioner must prove that at least a part of the underpayment
is attributable to fraud. Stoltzfus v. United States, supra;
Petzoldt v. Commissioner, 92 T.C. 661, 699 (1989). As set forth
above, we have calculated an underpayment of tax for each of the
years at issue. The remaining question is whether any part of
the underpayment for each year is attributable to fraud.
Fraud, as noted earlier, is an intentional wrongdoing with a
specific intent to evade a tax believed to be owed. The
existence of fraud is a question of fact based upon the entire
record and reasonable inferences drawn therefrom. Mensik v.
Commissioner, 328 F.2d 147, 150 (7th Cir. 1964), affg. 37 T.C.
703 (1962).
The Court has difficulty in concluding, under these
circumstances, that petitioner intended to evade taxes by conduct
calculated to conceal, mislead, or otherwise prevent the
collection of taxes. The Court must conclude on this record that
respondent has not carried the heavy burden of proving fraud with
clear and convincing evidence. On this issue, we hold for
petitioners.
The Court is satisfied, however, on this record, that
respondent's alternative determination that petitioners are
liable for the accuracy-related penalties under section 6662 for
both years should be sustained. Section 6662(a) provides
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