- 24 -
Fraud
Respondent also determined that petitioners are liable for
(i) additions to tax for fraud under section 6653(b)(1)(A) and
(B) for 1987, (ii) an addition to tax for fraud under section
6653(b) for 1988, and (iii) a penalty for fraud under section
6663 for 1989, 1990, and 1991.
Respondent bears the burden of proving fraud and must
establish it by clear and convincing evidence. Thus, we do not
bootstrap a finding of fraud upon a taxpayer’s failure to
disprove the Commissioner’s deficiency determination. See Parks
v. Commissioner, 94 T.C. 654, 660-661 (1990).
To carry his burden of proof, respondent must show by clear
and convincing evidence both (1) that an underpayment of tax
exists for each year in issue and (2) that at least some part of
the underpayment was due to fraud. See secs. 6653(b), 6663(a),
7454(a); Rule 142(b); DiLeo v. Commissioner, 96 T.C. 858, 873
(1991), affd. 959 F.2d 16 (2d Cir. 1992); Hebrank v.
Commissioner, 81 T.C. 640, 642 (1983). If the Commissioner
establishes that some portion of the underpayment is attributable
to fraud, the entire underpayment shall be treated as
attributable to fraud, except with respect to any portion of the
Page: Previous 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 NextLast modified: May 25, 2011