Steven H. Toushin - Page 13




                                       - 13 -                                         

               Respondent bears the burden of proof to show by clear and              
          convincing evidence that (1) an underpayment exists, and (2) some           
          part of the underpayment is due to fraud.  See Rule 142(b).                 
          Where fraud is determined for each of several years, respondent's           
          burden applies separately for each of the years.  See Estate of             
          Stein v. Commissioner, 25 T.C. 940, 959-963 (1956), affd. per               
          curiam sub nom. Levine v. Commissioner, 250 F.2d 798 (2d Cir.               
          1958).                                                                      
               A.  Underpayment of Tax                                                
               Where the allegations of fraud are intertwined with                    
          unreported and indirectly reconstructed income, respondent may              
          prove an underpayment either (1) by proving a likely source of              
          the unreported income or (2) where the taxpayer alleges a                   
          nontaxable source, by disproving the nontaxable source so                   
          alleged.  See Parks v. Commissioner, supra.                                 
               Respondent contends that petitioner's unreported income in             
          the years in issue was the result of petitioner's skimming from             
          the Bijou's cash receipts, and such skimmed receipts constitute             
          constructive dividends which are taxable to petitioner.                     
               Respondent carefully reconstructed the procedures used at              
          the Bijou for dealing with its daily cash receipts in 1980, 1981,           
          and 1982 and petitioner's unfettered access to those receipts.              
          Petitioner was the sole person with access to the drop safe at              
          the Bijou.  Petitioner collected the drop envelopes from the                





Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  Next

Last modified: May 25, 2011