Investment Research Associates - Page 220




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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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