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their basis was $314,849. Accordingly, we hold that the Vazzanas
recognized a capital gain of $33,151 on the sale of their house.
V. Unreimbursed Business Expense Deduction
On their joint 1989 Federal income tax returns, Mr. and Mrs.
Valenza claimed a $2,485 itemized deduction for unreimbursed
business expenses. We hold that petitioners are not entitled to
this deduction because they have failed to present any evidence
relating to this issue.
VI. Additions to Tax for Fraud
Respondent determined that petitioners, pursuant to sections
6653(b)(1) and 6663(a), were liable for additions to tax for
fraud. Section 6653(b)(1), applicable to petitioners' 1988
returns, and section 6663(a), applicable to petitioners' 1989
returns, provide for additions to tax equal to 75 percent of the
portion of the underpayment of tax that is attributable to fraud.
If respondent establishes that any portion of an underpayment is
attributable to fraud, the entire underpayment is treated as
attributable to fraud except to the extent petitioners establish
otherwise. Secs. 6653(b)(2), 6663(b). To prove fraud,
respondent must establish, by clear and convincing evidence, that
for each year in issue an underpayment of tax exists and that
some portion of the underpayment is due to fraud. Sec. 7454(a);
Rule 142(b); Petzoldt v. Commissioner, 92 T.C. 661, 699 (1989).
A. Underpayment
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