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petitioners’ assertion in this regard. Thus, we find that the
bank deposit analysis does not have to be adjusted for this item.
II. Fraud
The next issue is whether any part of the underpayment of
income tax for each year in issue is due to fraud. Respondent’s
notice of deficiency determined that petitioners are liable for
the addition to tax for fraud imposed under section 6653(b)(1)21
for the taxable year 1988 and penalties under section 6663(a)22
for the taxable years 1989, 1990, and 1991. Each section imposes
an addition to tax or penalty equal to 75 percent of the portion
of an underpayment that is attributable to fraud. Additionally,
each section provides that if any portion of an underpayment is
attributable to fraud, the entire underpayment is treated as
attributable to fraud, unless the taxpayer proves that some
portion of the underpayment is not due to fraud. Finally, in the
case of a joint return, the fraud penalty does not apply with
21Sec. 6653(b) provides, in part:
SEC. 6653(b). Fraud.--
(1) In general.--If any part of any underpayment
* * * of tax required to be shown on a return is due to
fraud, there shall be added to the tax an amount equal
to 75 percent of the portion of the underpayment which
is attributable to fraud.
22Sec. 6663(a) provides:
SEC. 6663(a). Imposition of Penalty.--If any part
of any underpayment of tax required to be shown on a
return is due to fraud, there shall be added to the tax
an amount equal to 75 percent of the portion of the
underpayment which is attributable to fraud.
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