- 13 -13 and (2) some part of the underpayment was due to fraud." Recklitis v. Commissioner, 91 T.C. 874, 909 (1988) (citations omitted); see also Hebrank v. Commissioner, 81 T.C. 640, 642 (1983). Although respondent need not prove the precise amount of the underpayment resulting from fraud, respondent may not carry his burden by merely relying on a taxpayer's failure to carry the burden of proof on the underlying deficiency. DiLeo v. Commissioner, 96 T.C. 858, 873 (1991), affd. 959 F.2d 16 (2d Cir. 1992); Otsuki v. Commissioner, 53 T.C. 96, 106 (1969). A. Underreporting of Tax Respondent asserts that petitioners had unreported income arising from the checks issued by J.C. Penney for delivery services rendered by AJF to Custom Decorating and fuel reimbursements for fuel expenses incurred by AJF. Petitioner AJF concedes that checks which were cashed by Ferrentino, received from Custom Decorating for delivery services, should have been included in AJF's gross income. However, petitioners argue that the fuel reimbursements are not includable in gross receipts of AJF, and the proceeds from Ferrentino's check cashing are not includable in his gross income because he used the proceeds to pay "casual labor" forPage: Previous 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Next
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