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return for every month the return is late, but not to exceed 75
percent.
To establish fraud for each of the years in issue,
respondent has the burden to prove by clear and convincing
evidence that a taxpayer underpaid the taxpayer's correct tax
liability and that part of the underpayment was due to fraudulent
intent. Sec. 7454(a); Rule 142(b); Zell v. Commissioner, 763
F.2d 1139, 1142 (10th Cir. 1985), affg. T.C. Memo. 1984-152;
Clayton v. Commissioner, 102 T.C. 632, 646 (1994); Recklitis v.
Commissioner, 91 T.C. 874, 909 (1988).
Where allegations of fraud are intertwined with unreported
and indirectly reconstructed income, respondent is required to
establish a likely source for the alleged unreported income.
DiLeo v. Commissioner, 96 T.C. 858, 873 (1991), affd. 959 F.2d 16
(2d Cir. 1992); Parks v. Commissioner, 94 T.C. at 661.
With respect to the fraud addition to tax only, bank
deposits will not be treated as taxable income unless respondent
proves a likely taxable source of the bank deposits or disproves
nontaxable sources alleged by the taxpayer. Parks v.
Commissioner, supra at 661.
For fraud purposes, a taxpayer is generally required to
present probative evidence of deductions not previously claimed
before respondent bears any burden of proof with regard to
alleged additional deductions claimed by a taxpayer. See United
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