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Respondent determined that petitioners are liable for
additions to tax for fraud under section 6653(b)(1) for all years
in issue. Respondent asserts that for all years in issue,
petitioners’ omitted West Florida Gas rebate income gave rise to
underpayments attributable to fraud. In addition, for taxable
year 1988, respondent asserts that petitioners’ omission from
gross income of ACT assets sales proceeds gave rise to additional
amounts of underpayment attributable to fraud.
Discussion
For 1986 and 1987, if any part of any underpayment of a tax
required to be shown on a return is due to fraud, there is an
addition to tax equal to 75 percent of the portion of the
underpayment attributable to fraud, along with 50 percent of the
interest due on the portion of the underpayment attributable to
fraud. See sec. 6653(b)(1)(A) and (B). For 1988, if any part of
any underpayment of a tax required to be shown on a return is due
to fraud, there is an addition to tax of 75 percent of the
portion of the underpayment that is attributable to fraud. See
sec. 6653(b)(1).
Respondent must prove fraud by clear and convincing
evidence. See sec. 7454(a); Rule 142(b). Fraud is the
intentional wrongdoing of a taxpayer to evade tax believed to be
owing. See Petzoldt v. Commissioner, 92 T.C. 661, 698 (1989). A
finding of fraud requires a showing that the taxpayer intended to
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