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fraud, except for any portion that the taxpayer establishes is
not attributable to fraud.
For taxable year 1989, section 6663(a) provides for the
imposition of a fraud penalty in an amount equal to 75 percent of
the portion of the underpayment that is attributable to fraud.
Section 6663(b) provides further that, if the Secretary
(Commissioner) establishes that any portion of the underpayment
is attributable to fraud, the entire underpayment is treated as
attributable to fraud, except for any portion that the taxpayer
establishes is not attributable to fraud.
C. General Legal Principles Relating to Civil Fraud
The Commissioner bears the burden of proof with respect to
the additions to tax and penalties for fraud, and that burden
must be carried by clear and convincing evidence. See sec.
7454(a); Rule 142(b); Rowlee v. Commissioner, 80 T.C. 1111, 1123
(1983).
Respondent must establish each element of fraud by clear and
convincing evidence in each of the years at issue. See sec.
7454(a); Rule 142(b); Smith v. Commissioner, 926 F.2d 1470, 1475
(6th Cir. 1991), affg. T.C. Memo. 1989-171; Traficant v.
Commissioner, 884 F.2d 258, 263 (6th Cir. 1989), affg. 89 T.C.
501 (1987). In view of our order granting petitioners' motions
to strike portions of respondent's amendments to answers,
respondent must prove by clear and convincing evidence for each
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