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Discussion
Fraud Penalty
The Commissioner has the burden of proving fraud by clear
and convincing evidence. Sec. 7454; Rule 142(b); Parks v.
Commissioner, 94 T.C. 654 (1990).
As part of his burden in the trial of a fraud case, the
Commissioner must first prove an underpayment of some amount of
tax. Sec. 6663(a)2; Hebrank v. Commissioner, 81 T.C. 640, 642
(1983). To do this, the Commissioner may not merely rely on the
taxpayer's failure to disprove the deficiency determination.
Parks v. Commissioner, supra. The parties in this case, however,
agree that petitioner and her late husband underpaid their income
taxes for 1991 and 1992, and that petitioner underpaid her income
taxes for and 1994.
Second, the Commissioner must show that at least some part
of the underpayment of tax was due to fraud. Sec. 6663(a); Rule
142(b); DiLeo v. Commissioner, 96 T.C. 858, 873 (1991), affd. 959
F.2d 16 (2d Cir. 1992); Parks v. Commissioner, supra at 664;
Hebrank v. Commissioner, supra. If the Commissioner establishes
that some portion of the underpayment is attributable to fraud,
the entire underpayment shall be treated as attributable to
2Former sec. 6653 was repealed and replaced by sec. 6663.
See Omnibus Budget Reconciliation Act of 1989, Pub. L. 101-239,
sec. 7721(a), 103 Stat. 2106, 2397.
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