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fraud. Sec. 6653(b)(1); DiLeo v. Commissioner, 96 T.C. 858, 873
(1991), affd. 959 F.2d 16 (2d Cir. 1992). For the addition to
tax under section 6653(b)(2) to apply, the Commissioner must
establish the specific portion of the underpayment which is
attributable to fraud. Sec. 6653(b)(2); DiLeo v. Commissioner,
supra at 873.
To prove an underpayment of tax, the Commissioner cannot
rely on the taxpayer's failure to satisfy his or her burden of
proof as to the underlying deficiency. Parks v. Commissioner, 94
T.C. 654, 661 (1990). Where allegations of fraud are intertwined
with unreported and indirectly reconstructed income, the
Commissioner can prove an underpayment by proving a likely source
of the unreported income or, where the taxpayer alleges a
nontaxable source, by disproving the alleged nontaxable source.
DiLeo v. Commissioner, supra at 873-874.
Wilson, Grove, and Cattalo were convicted under section
7206(1) of filing false returns for both 1982 and 1983. Giongo
was convicted of filing a false return for 1983, but not 1982.
The convictions do not estop petitioners from denying that there
was an underpayment of tax or that any such underpayment was due
to fraud. Considine v. United States, 227 Ct. Cl. 77, 80-81, 645
F.2d 925, 928 (1981); Wright v. Commissioner, 84 T.C. 636 (1985);
Franklin v. Commissioner, T.C. Memo. 1993-184. The convictions,
however, are evidence to be considered in deciding whether
respondent has proved an underpayment of tax due to fraud.
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