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of the years in issue (1) the existence of an underpayment of tax
each year attributable to transactions related to the Five, and
(2) that the underpayment of that tax is due to fraud.
However, if respondent establishes that there are
underpayments of tax from transactions related to the Five that
are attributable to fraud, the amount of the addition under
section 6653(b) for 1978 through 1981 and under section
6653(b)(1) for 1982 through 1985 is equal to 50 percent of the
entire underpayment of tax, including any portion of the
underpayment not related to transactions related to the Five.
Additionally, if respondent satisfies his burden for 1988 and
1989, the amount of the addition or penalty is equal to 75
percent of the entire underpayment, unless petitioners establish
that any portion of an underpayment (resulting from the other
issues decided in these cases) is not attributable to fraud.
D. Underpayments of Tax
Respondent must first prove by clear and convincing evidence
that Ballard, Lisle, and Kanter each underpaid their taxes for
each of the years at issue on income attributable to transactions
related to the Five.
Section 61(a) defines gross income to include "all income
from whatever source derived". In addition, the Supreme Court
has determined that gross income includes all "'accessions to
wealth, clearly realized, and over which the taxpayers have
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