Mahendra K. Tandon - Page 24

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               The Commissioner has the burden of proving fraud by clear              
          and convincing evidence.  Sec. 7454(a); Rule 142(b).  To satisfy            
          the burden of proof, the Commissioner must show:  (1) An                    
          underpayment exists; and (2) the taxpayer intended to evade taxes           
          known to be owing by conduct intended to conceal, mislead, or               
          otherwise prevent the collection of taxes.  See Parks v.                    
          Commissioner, 94 T.C. 654, 660-661 (1990).  The Commissioner must           
          meet this burden through affirmative evidence because fraud is              
          never imputed or presumed.  Beaver v. Commissioner, 55 T.C. 85,             
          92 (1970).                                                                  
               For 1985, if any part of the underpayment is due to fraud,             
          section 6653(b)(1) imposes an addition to tax equal to 50 percent           
          of the underpayment, and section 6653(b)(2) imposes a separate              
          addition to tax, equal to 50 percent of the interest payable                
          under section 6601, determined on the portion of the underpayment           
          attributable to fraud.  For 1986 and 1987, if any part of the               
          underpayment is due to fraud, section 6653(b)(1)(A) imposes an              
          addition to tax equal to 75 percent of the portion of the                   
          underpayment attributable to fraud, and section 6653(b)(1)(B)               
          imposes a separate addition to tax, equal to 50 percent of the              
          interest payable under section 6601, determined on the portion of           
          the underpayment attributable to fraud.  For 1988, if any part of           
          the underpayment is due to fraud, section 6653(b)(1) imposes an             
          addition to tax equal to 75 percent of the portion of the                   





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