Gold Bar, Incorporated - Page 6




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          expenses in the same amounts, resulting in no taxable income                  
          reported for 1993, 1994, and 1995 Federal income tax purposes.                
                                        OPINION                                         
               Respondent determined that petitioner fraudulently failed to             
          report income by overstating its expenses and/or underreporting               
          its gross receipts on its 1993, 1994, and 1995 tax returns,                   
          resulting in underpayments of $8,798, $34,661, $38,206,                       
          respectively.  Respondent determined that the entire underpayment             
          for each year is attributable to fraud.  Therefore, respondent                
          determined that petitioner is liable for civil fraud penalties                
          under section 6663 in the amounts of $6,599, $25,996, and                     
          $28,655, respectively.                                                        
               Section 6663(a) provides that if any part of an underpayment             
          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.  Fraud is defined as an intentional                    
          wrongdoing designed to evade tax believed to be owing.  See                   
          Edelson v. Commissioner, 829 F.2d 828, 833 (9th Cir. 1987), affg.             
          T.C. Memo. 1986-223.  Respondent has the burden of proving fraud              
          by clear and convincing evidence.  See Rule 142(b).  To satisfy               
          this burden, respondent must show (1) that an underpayment                    
          exists, and (2) that the taxpayer intended to evade taxes known               
          to be owing by conduct intended to conceal, mislead, or otherwise             








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