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and that were claimed on Cal Ben’s partnership tax returns.
During and after trial, the parties settled all issues relating
to deductions disallowed in respondent’s notice of deficiency.
In 1993, a Federal grand jury returned an indictment
charging petitioner and David Karp with tax evasion in violation
of section 7201 and with conspiracy to defraud the United States
by obstructing the lawful ascertainment and collection of income
taxes in violation of 18 U.S.C. section 371.
On May 30, 1993, after his indictment, David Karp died.
On September 23, 1993, petitioner pled guilty to one count
of tax evasion with respect to his individual income tax
liability for 1986 in violation of section 7201 and to one count
of conspiracy to defraud the United States in violation of 18
U.S.C. section 371. In connection with the above plea,
petitioner was sentenced to prison and fined $250,000.
OPINION
Under section 6653(b) the addition to tax for fraud is
applicable if any part of an underpayment of tax is attributable
to fraud. To establish fraud, respondent is required to prove
that the taxpayer underreported his or her correct tax liability
and that some part of the underreporting was due to fraudulent
intent. DiLeo v. Commissioner, 96 T.C. 858, 873 (1991), affd.
959 F.2d 16 (2d Cir. 1992).
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