- 7 -
At trial, petitioners presented no testimony as to the
legitimacy of these claimed itemized deductions. Further, on
brief, petitioners failed to address their entitlement to these
itemized deductions. Accordingly, we treat this issue as
conceded by petitioners. See Petzoldt v. Commissioner, 92 T.C.
661, 683 (1989).
Fraud
Respondent determined that Mrs. Dykstra was liable for the
fraud penalty pursuant to section 6663(a) for 1994 and an
addition to tax for her fraudulent failure to file a return
pursuant to section 6651(f) for 1995. Mrs. Dykstra admits that
she embezzled funds from Robins and failed to report the funds on
her 1994 return. She also admits that she never filed a return
for 1995. Mrs. Dykstra, however, claims that she did not know
that embezzled funds were taxable; therefore, she did not possess
the requisite fraudulent intent in 1994 or 1995.
In order to prove fraud and fraudulent failure to file,
respondent must demonstrate by clear and convincing evidence that
Mrs. Dykstra intended to evade taxes believed to be owing by
conduct intended to conceal, mislead, or otherwise prevent the
collection of such taxes. See Parks v. Commissioner, 94 T.C.
654, 660-661 (1990). Where a taxpayer claims ignorance of the
law, respondent must negate that claim by clear and convincing
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