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July 25, 1994, that motion was denied. Ballard and Lisle also
filed, and the Court granted, motions to strike portions of
respondent's amendments to answer that asserted increases in
deficiencies and fraud with respect to transactions unrelated to
payments from the Five in their cases. Thus, the issue to be
decided is whether Kanter, Ballard, and Lisle are liable for the
additions to tax and penalties for fraud related to income from
transactions with the Five.
Respondent contends that Kanter, Ballard, and Lisle are
liable for the additions to tax and penalties for fraud for the
years at issue because they received the income from kickback
payments involved in a complex scheme intended to conceal,
mislead, or otherwise prevent the collection of taxes.
To the contrary, petitioners contend that they did not
receive such income and that respondent has failed to prove by
clear and convincing evidence that they are liable for the
asserted fraud additions to tax and penalties.
B. Applicable Statutory Provisions
For taxable years 1978 through 1981, section 6653(b)
provides for an addition to tax in an amount equal to 50 percent
of the underpayment of tax if any part of the underpayment is due
to fraud.
For taxable years 1982 through 1985, section 6653(b)(1)
provides for an addition to tax in an amount equal to 50 percent
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