Ella Freidus - Page 16

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          fraud, then the entire amount of the underpayment is to be                   
          treated as attributable to fraud, except for any portion of the              
          underpayment which the taxpayer establishes is not due to fraud.             
          See sec. 6653(b)(2).  In order for the additions to tax for fraud            
          under section 6653(b) to apply, respondent must prove by clear               
          and convincing evidence that an underpayment exists and that some            
          portion of such underpayment is due to fraud.  See sec. 7454(a);             
          Rule 142(b); Niedringhaus v. Commissioner, 99 T.C. 202, 210                  
               Section 6651(a) imposes an addition to tax equal to 5                   
          percent of the amount required to be shown on the return if a                
          taxpayer fails to file within one month of the date prescribed.              
          That section further imposes an additional 5 percent addition to             
          tax for each month or fraction thereof during which such failure             
          persists, not to exceed 25 percent in the aggregate.  If any                 
          failure to file a return is fraudulent, section 6651(f) increases            
          the additions to tax imposed under section 6651(a) to 15 percent             
          of the net amount of tax due for each month that the return is               
          not filed, up to a maximum of 75 percent.  In this case,                     
          respondent must prove under section 6651(f) that petitioner's tax            
          liability for 1989 and 1990 exceeds her prepayment credits and               
          that her failure to file for each taxable year was an attempt to             
          evade tax.  See secs. 7454, 6651(a)(1), (b)(1), (f); Rule 142(b).            
          To determine whether petitioner's failure to file her return was             

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Last modified: May 25, 2011