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OPINION
A. Addition to Tax for Fraud Under Section 6653(b) and
Penalty Under Section 6663(a)
1. Background
Respondent contends that petitioner is liable for the
addition to tax for fraud under section 6653(b) for 1988 and the
fraud penalty under section 6663(a) for 1989, and concedes that
Mrs. Groves is not liable for fraud. Respondent has the burden
of proving fraud by clear and convincing evidence. See sec.
7454(a); Rule 142(b). Respondent must establish: (a) Petitioner
underpaid tax for each year in issue, and (b) some part of the
underpayment is due to fraud. See sec. 6653(b); Parks v.
Commissioner, 94 T.C. 654, 660-661 (1990); Petzoldt v.
Commissioner, 92 T.C. 661, 699 (1989).
2. Underpayment
Petitioners concede that they underpaid tax related to their
sales of OPCS stock for 1988 and 1989.
3. Fraudulent Intent
For purposes of section 6653(b), fraud is the intentional
commission of an act to evade a tax believed to be owing. See
Webb v. Commissioner, 394 F.2d 366, 377 (5th Cir. 1968), affg.
T.C. Memo. 1966-81; Mitchell v. Commissioner, 118 F.2d 308, 310
(5th Cir. 1941), revg. 40 B.T.A. 424 (1939). Fraud is never
presumed; it must be established by affirmative evidence. See
Beaver v. Commissioner, 55 T.C. 85, 92 (1970). The Commissioner
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Last modified: May 25, 2011